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Determinants in Introduction of Outside Directors in Korean Companies

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Authors
Cho, Dong Sung; Kim, Jootae
Issue Date
2003-06
Publisher
Institute of International Affairs, Graduate School of International Studies, Seoul National University
Citation
Journal of International and Area Studies, Vol.10 No.1, pp. 1-20
Keywords
Agency TheoryOutside DirectorGovernance Structure
Abstract
Corporate governance is one of the major topics in strategic management, however the majority of research on this subject is limited to analysis of governance mechanism impact on management. This paper intends to analyze other various factors that influence the governance mechanism. Specific focus is placed on identifying factors that affect the introduction of outside directors to Korean companies in the post-currency crisis era. Three areas, which are generally regarded as major sources of competitive advantages of a firm, are taken into consideration in order to determine these factors: managerial, environmental and internal resources. In turn, we continue our examination of seven variables derived from these three areas. Introduction effectiveness of outside directors is measured by three factors, such as independence, information and compensation. Empirical tests from 110 Korean manufacturing companies, reveals that effective introduction of outside directors in Korean companies after the currency crisis has a positive relationship with firm size and debt ratio, a negative relationship with the ownership rate of large shareholders and mixed result with past performance.
ISSN
1226-8550
Language
English
URI
http://hdl.handle.net/10371/96384
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Graduate School of International Studies (국제대학원)Dept. of International Studies (국제학과)Journal of International and Area StudiesJournal of International and Area Studies vol.10 (2003)
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