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Corporate Governance Structure and International Performance: A Focus on the Impact of Foreign Board Membership and Foreign Shareholders

박정민|빅토리아 나자르축
한국국제경영학회 (Korean Academy of International Business)|2017.05|국제경영연구 (International Business Journal)|제28권 제2호|pp. 59-90|DOI http://dx.doi.org/10.14365/ibj.2017.28.2.3

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참고문헌

키워드

international performanceforeign outside directorsforeign inside directorsforeign shareholders외국인 사내 이사외국인 사외 이사외국인 주주해외 성과
주제분류경영학

초록

The impact of having an increasing number of foreign representatives serve as organizational board members and shareholders has been a controversial issue in regards to firm performance. While some researchers find that foreign representatives contribute to corporate governance processes; others, however, argue that they negatively affect organizational performance due to short-term profitability. However, among those studies conducted, the impact of foreign board members and foreign shareholders on the international performance of organizations has yet to be investigated. This study examines the direct impact that foreign representatives, who in corporate governance structure serve as inside/outside directors and organizational shareholders, have on a firm’s international performance by combining two perspectives: the resource-based view and agency theory. Using a sample of South Korean non-financial KOSPI companies obtained from KisValue and TS-2000 databases spanning from 2012 to 2014 with a one-year time lag, the immediate study found significantly higher values for firms that have foreign representatives among outside directors and organizational shareholders. However, when the number of foreign representatives becomes concentrated enough to create difficulties in managing the organizations in terms of obtaining necessary information and communicating effectively, the positive impact of foreign representatives diminishes, showing the pattern of so-called inverted U-shaped relationships. The study contributes significantly to the literature on the corporate boards and governance, and sets the foundation for future investigation in this field, which is of both theoretical and empirical importance.

Abstract

The impact of having an increasing number of foreign representatives serve as organizational board members and shareholders has been a controversial issue in regards to firm performance. While some researchers find that foreign representatives contribute to corporate governance processes; others, however, argue that they negatively affect organizational performance due to short-term profitability. However, among those studies conducted, the impact of foreign board members and foreign shareholders on the international performance of organizations has yet to be investigated. This study examines the direct impact that foreign representatives, who in corporate governance structure serve as inside/outside directors and organizational shareholders, have on a firm’s international performance by combining two perspectives: the resource-based view and agency theory. Using a sample of South Korean non-financial KOSPI companies obtained from KisValue and TS-2000 databases spanning from 2012 to 2014 with a one-year time lag, the immediate study found significantly higher values for firms that have foreign representatives among outside directors and organizational shareholders. However, when the number of foreign representatives becomes concentrated enough to create difficulties in managing the organizations in terms of obtaining necessary information and communicating effectively, the positive impact of foreign representatives diminishes, showing the pattern of so-called inverted U-shaped relationships. The study contributes significantly to the literature on the corporate boards and governance, and sets the foundation for future investigation in this field, which is of both theoretical and empirical importance.

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