董事會的有效性：外部董事與內部董事

Abstract

This paper examines the dual roles of boards within corporate governance as both monitor and advisor. The results not only provide empirical evidence, which is in contrast with the common notions that board composition is uncorrelated with firm performance but also explain the internal relations within the board, namely, its dual roles—a matter that is not settled in literature. Moreover, we offer an explanation for mixed results in prior studies for the optimal performance-enhancing board composition. We hypothesize and find that outside and inside directors serve different monitoring and advisory roles, which are amplified within diversified leveraged firms and R&D-intensive firms respectively, to affect firm performance. Finally, we explore the effect of the requirement for majority independent directors imposed by Sarbanes–Oxley Act of 2002 and related rules.