We examine the effect of board independence on spending and payout policy using the 2003 NYSE and NASDAQ board independence requirements as an exogenous shock. Non-compliant firms that are forced to raise board independence reduce the spending on acquisitions and capital expenditures and...

In their 2008 paper, Dahya, Dimitrov, and McConnell find that corporate values are lower when a higher fraction of the firm’s board of directors is associated with the dominant shareholder, especially in countries with weak legal regimes. Our study presents a simple model that is consistent...