Does (exogenous) enhancement in board independence deter tunneling? This study uses regulatory changes in Hong Kong that caused some listed companies to increase the proportion of independent directors on their boards as a shock, and stock price reaction to announced related-party transactions (RPTs) as outcome to estimate the effect of board independence in constraining value-destroying RPTs in a triple-difference approach. As our research design is largely free from endogeneity problems, findings of this study have potential to make important contribution to the literature on the monitoring role of independent directors.
|Effective start/end date
|1/01/18 → 31/12/19