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Determinants of board size in an emerging market
Author(s) -
Min Byung S.
Publication year - 2018
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/jifm.12066
Subject(s) - corporate governance , shareholder , statutory law , seniority , business , argument (complex analysis) , emerging markets , industrial organization , panel data , resource (disambiguation) , accounting , economics , finance , biochemistry , chemistry , political science , law , econometrics , computer network , computer science
Drawing largely upon the selective adaptation paradigm, the resource dependence literature, and the capture argument, we examine determinants of board size using panel data set of Korean‐listed companies that have experienced dramatic changes in their governance system following the 1997 Asian crisis and regulatory reforms. Observing that the firm's compliance with statutory requirements reflects a strategic choice, our results also investigate the idea that the determinants of board size differ between firms actively and passively adapting to regulatory reforms. For actively adaptive firms, board size increases along with firm complexity but it varies inversely with the power of controlling shareholders ( CSH s). In contrast, the roles of complexity and CSH s are not significant but seniority‐based promotion is an important factor to increase the size for the passive firms. Our results suggest that determinants of board size differ depending on corporate strategies to comply with statutory requirements in an emerging market where family business is dominant and corporate governance system has substantially changed.