Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212214 
Year of Publication: 
2012
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 11/2012
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This study uses the current financial crisis as a quasi-experiment to examine whether and to what extent corporate boards affect the performance of firms. Using cumulative stock returns over the crisis to measure of firm performance, we find that board independence, as traditionally defined, does not significantly affect firm performance. However, when we re-define independent directors as outside directors who are less connected with current CEOs, a measure we call true independence, there is a positive and significant relationship between this measure and firm performance. Second, outside financial experts are important for firm performance. Third, board meeting frequencies, director attendance behaviors, and director age also affect firm performance during the crisis. Overall, our results suggest that firm performance during a crisis is a function of firm-level differences in corporate boards.
Subjects: 
Financial crisis
Boards of directors
Firm performance
True independence
JEL: 
G01
G30
G34
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-796-2
Document Type: 
Working Paper

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