Three essays on corporate boards
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The overriding theme of the three essays is the board of directors’ contribution to value creation. They use a data sample of Norwegian listed firms in the period 1989 to 2002, which by international standards constitute a sizable sample. The first essay asks if value creation is enhanced when the directors are aligned with shareholders interests, when they are well informed, and when they are decisive as a unit. The essay confirms these conjectures. In particular, higher director ownership and better network improve firm performance, but a larger and gender mixed board, and employee directors decreases it. The concern in the second essay is the impact of employee directors on firm value. A simultaneous equation is built, where the employee directors influence firm value directly, but also indirectly through impact upon the board’s composition and the firm’s leverage. The direct effect is found to be negative, the indirect positive, but the indirect effect is not strong enough to neutralise the negative direct effect. In the third essay the CEO and director turnovers are seen in conjunction, unlike the traditional approach. The findings are that CEO and directors tend to leave simultaneously, and that ownership concentration is important for the directors’ turnover, but not the CEO’s. This rejects the notion of CEO entrenchment in Norwegian companies.
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