Board structure: an empirical study of firms in Anglo-American governance environments

Abstract

Purpose– With boards of directors playing both monitoring and guidance roles, the purpose of this paper is to examine the impact of board structure on firm value in large US and UK firms using the lenses of agency and resource dependence theories.Design/methodology/approach– Using a sample of firms in the USA and the UK from 2000 to 2007, the paper conducts a panel data analysis of the impact of board structure on firm value and examine the nuances of different governance environments.Findings– The paper finds distinct differences in the impact of board independence, board size, and outside director busyness on firm value between UK and US firms. Specifically, the paper finds that board independence, board size, and board busyness all have a significant positive impact on firm value in the UK. However, the paper finds no significant relationship between board independence and firm value among US firms. Both board size and board busyness are found to be positively associated with firm value in the USA.Social implications– The paper finds strong support for resource dependence theory in the UK but limited support for agency theory in the USA.Originality/value– This paper takes a multi-country approach to examining the impact of board structure on firm value.