Working Paper No. 567

The Impact of Foreign Board Membership on Firm Value

Published: December 10, 2001 Pages: 37Keywords: Foreign Board Membership; Corporate Governance; Board Monitoring; Cross-ListingJEL-codes: F36; G30; G32

The Impact of Foreign Board Membership on Firm Value Lars Oxelheim and Trond Randøy


This study examines the effect of foreign (Anglo-American) board membership on corporate performance measured in terms of firm value (Tobin’s Q). On a basis of firms with headquarters in Norway or Sweden the study indicates a significantly higher value for firms that have outsider Anglo-American board member(s), after a variety of firm-specific and corporate governance related factors have been controlled for. We argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by “importing” an Anglo-American corporate governance system. Such an “import” signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market.

 

Lars Oxelheim

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Social Capital and Health

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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