THESIS
2011
vii, 51 p. : ill. ; 30 cm
Abstract
This paper investigates how institutional environment like property rights protection influences
the size and composition of corporate boards, and further, how board structure impacts firm
performance in China. Using a World Bank survey of 2400 firms across 18 Chinese cities, I find
robust evidence that weaker helping hand from the government is associated with a higher
number and proportion of outsiders on the board, after controlling for the effects of firm
complexity, growth opportunities, CEO characteristics, ownership, and other variables. The
instrumental variables estimation suggests that this relationship is causal. Furthermore, the results
show that when firms are operating in a weak property rights environment, more outsiders
improve corporate performance.
JEL class...[
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This paper investigates how institutional environment like property rights protection influences
the size and composition of corporate boards, and further, how board structure impacts firm
performance in China. Using a World Bank survey of 2400 firms across 18 Chinese cities, I find
robust evidence that weaker helping hand from the government is associated with a higher
number and proportion of outsiders on the board, after controlling for the effects of firm
complexity, growth opportunities, CEO characteristics, ownership, and other variables. The
instrumental variables estimation suggests that this relationship is causal. Furthermore, the results
show that when firms are operating in a weak property rights environment, more outsiders
improve corporate performance.
JEL classification: G34; G3; K22; P3
Keywords: Corporate Governance; Property rights; Institutions; Board size; Board composition;
Corporate performance; Corporate law
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