Connected board of directors: A blessing or a curse?

Stephen Y L CHEUNG*, Cheong Wing Chung, Weiqiang TAN, Wenming WANG

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

14 Citations (Scopus)


This study attempts to identify the connection between the board of directors (BoD) and the controlling shareholder. We investigate how this connection affects the corporate governance practice and market performance of Hong Kong listed firms. Our results reveal that close connections between the BoD and the controlling shareholder have a negative effect on corporate governance practice. Our findings also indicate a lower market valuation for firms with a connected BoD. The evidence suggests that the market discounts the value of firms with a connected BoD. The evidence seems to reinforce the importance of the role of independent non-executive directors (INEDs) to enhance the independence of BoD.

Original languageEnglish
Pages (from-to)3227-3242
Number of pages16
JournalJournal of Banking and Finance
Issue number8
Publication statusPublished - Aug 2013

Scopus Subject Areas

  • Finance
  • Economics and Econometrics

User-Defined Keywords

  • Board structure
  • Corporate governance
  • Family ownership
  • Hong Kong
  • OECD principles


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