Emerald Article: Foreign board membership and firm value in Korea Hyang Mi Choi, Wonsik Sul, Sang Kee Min
To cite this document: Hyang Mi Choi, Wonsik Sul, Sang Kee Min, (2012),"Foreign board membership and firm value in Korea", Management Decision, Vol. 50 Iss: 2 pp. 207 - 233 Permanent link to this document: http://dx.doi.org/10.1108/00251741211203533 Downloaded on: 18-11-2012 References: This document contains references to 72 other documents To copy this document: email@example.com
Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF WOLLONGONG For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. Information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download.
The current issue and full text archive of this journal is available at www.emeraldinsight.com/0025-1747.htm
Foreign board membership and ﬁrm value in Korea
Hyang Mi Choi
College of Business Administration, Seoul National University, Seoul, Korea
Foreign board membership
College of Economics and Business Administration, Sookmyung Women’s University, Seoul, Korea, and
Sang Kee Min
College of Business Administration, Seoul National University, Seoul, Korea Abstract
Purpose – This paper seeks to explore such questions as: “What are the impacts of foreign investors and what are the channels through which foreign investors contribute to or detracts from ﬁrm value in Korea?” It aims to discuss how foreign investors and foreign outside directors interact to enhance ﬁrm value. Design/methodology/approach – Using longitudinal data from the KOSPI200 index in Korea during 2004-2007, the study examined the direct and interaction effect of foreign blockholders and foreign board members. To address the representativeness of foreign investors, the authors veriﬁed the mandates of foreign board members though telephone interviews. Findings – Foreign block shareholders and foreign outside directors respectively provide expertise and independent monitoring over management. Foreign blockholders’ management control via board membership is likely to mitigate leverage of value enhancement when foreign outside directors represent private interests of foreign blockholders. The moderating effect is also supported since foreign ownership concentration has an inverted U-shaped relationship with value enhancement. The paper conﬁrms that board independence reinforces the positive impact of foreign outside directors on ﬁrm value. Research limitations/implications – This study offers a key to understanding corporate governance in that mutual monitoring and a balance among various types of stakeholders are crucial to value enhancement. Originality/value – The paper provides clues to the extant diverse ﬁndings concerning the impact of foreign investors on ﬁrm value. It applies an integrated perspective to the empirical analyses of the impact of foreign investors by giving consideration to the agency – foreign outside directors – to implement management control on behalf of foreign blockholders. Keywords Foreign ownership, Foreign board...