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Outside directors on Korean Boards: governance and institutions

journal contribution
posted on 03.07.2014 by Amon Chizema, Jootae Kim
Drawing on institutional theory, this study examines the factors that pressured Korean firms to appoint outside directors to their boards. While this practice could be considered to be a management innovation in Korea, in the Anglo-American corporate governance system it has long been used as one of several mechanisms to mitigate agency costs between management and shareholders. As such, this response by Korean firms, following the 1997–98 currency crisis in Asia, could be seen as an example of corporate governance convergence on the Anglo-American model, where higher levels of outside director representation on the board are the norm. We examine the antecedents of having a higher proportion of outside directors on Korean boards. Our findings indicate that larger firms that are under stricter control by the government have higher representation of outside directors on the board. We also find a positive and significant relationship between the proportion of outside directors and business group affiliation, poor prior firm performance, higher levels of debt and foreign ownership.

History

School

  • Business and Economics

Department

  • Business

Published in

JOURNAL OF MANAGEMENT STUDIES

Volume

47

Issue

1

Pages

109 - 129 (21)

Citation

CHIZEMA, A. and KIM, J., 2010. Outside directors on Korean Boards: governance and institutions. Journal of Management Studies, 47 (1), pp.109- 129.

Publisher

Blackwell Publishing Ltd (© Blackwell Publishing Ltd and Society for the Advancement of Management Studies)

Version

NA (Not Applicable or Unknown)

Publication date

2010

Notes

This paper is closed access.

ISSN

0022-2380

Language

en

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