Larry Fauver is Associate Professor, James. F. Smith, Jr. Professor of Financial Institutions, and a Research Fellow of the Corporate Governance Center at the University of Tennessee Knoxville Haslam College of Business. This post is based on a recent article, forthcoming in the Journal of Financial Economics, authored by Professor Fauver; Mingyi Hung, Chair Professor of Accounting at Hong Kong University of Science and Technology; Xi Li, Assistant Professor of Accounting at Hong Kong University of Science and Technology; and Alvaro G. Taboada, Assistant Professor of Finance at Mississippi State University College of Business.
The last two decades have witnessed an increase in corporate board reforms designed to create greater board independence, audit committee and auditor independence, and separation of the chairman and chief executive officer positions. Do these reforms affect firm value? Existing research on such reforms has typically focused on a single country and yielded mixed results. In our Journal of Financial Economics article, Board Reforms and Firm Value: Worldwide Evidence, we examine the impact of corporate board reforms on firm value in 41 countries and find that such reforms do indeed increase firm value, with the effects determined by the type and nature of the reforms.