Board Ownership and Firm Value in Taiwan - A Panel Smooth Transition Regression Model

Using a panel of 504 Taiwanese listed firms during a 10-year period (2002-2011), this study tests whether there is an optimal level of board ownership, which maximizes firm value. This work adopts Tobin’s Q as the proxy for firm value and finds that board ownership between 11.57% and 14.35% are an optimal level of board ownership to maximize firm value. This shift in financing sources propels the nonlinear relationship uncovered in this study and sheds light on Taiwan’s legal system of ownership structure.