Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 567:
The Impact of Foreign Board Membership on Firm Value

Lars Oxelheim () and Trond Randøy ()

Abstract: This study examines the effect of foreign (Anglo-American) board membership on corporate performance measured in terms of firm value (Tobin’s Q). On a basis of firms with headquarters in Norway or Sweden the study indicates a significantly higher value for firms that have outsider Anglo-American board member(s), after a variety of firm-specific and corporate governance related factors have been controlled for. We argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by “importing” an Anglo-American corporate governance system. Such an “import” signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market.

Keywords: Foreign Board Membership; Corporate Governance; Board Monitoring; Cross-Listing; (follow links to similar papers)

JEL-Codes: F36; G30; G32; (follow links to similar papers)

37 pages, December 10, 2001

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This paper is published as:
Oxelheim, Lars and Trond Randøy, (2003), 'The Impact of Foreign Board Membership on Firm Value', Journal of Banking and Finance, Vol. 27, No. 12, pages 2369-2392

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