The Influence of Board Structure on the Value of NZX Listed Firms and its Association with Growth Options

26 Pages Posted: 26 Mar 2012

See all articles by Keitha L. Dunstan

Keitha L. Dunstan

Bond University - School of Business

Trish Keeper

Victoria University of Wellington - Te Herenga Waka

Thu Phuong Truong

Victoria University of Wellington - Te Herenga Waka

Tony van Zijl

Victoria University of Wellington - Te Herenga Waka - Faculty of Commerce and Administration

Date Written: August 2011

Abstract

Our study examines the relationship between four indicators of board structure and firm value and the extent to which this relationship may be affected by the level of growth options relative to assets-in-place. These indicators are the level of accounting expertise, gender diversity, the level of independence and the size of the board. Using a sample of 543 firm-years covered by 125 firms listed on the New Zealand Exchange for the 1998-2007 financial years, we found that these board structure indicators together with the level of growth options significantly impact on firm value after effectively controlling for the endogeneity problem. Specifically, firms with a lower number of directors with accounting expertise and/or a higher number of female directors on the board have higher firm value. For firms with a higher level of growth options, a higher percentage of independent directors on the board and/or a larger board are more value relevant. Our findings related to board accounting expertise and board gender diversity particularly may have important implications for corporate regulators.

Keywords: board structure, firm value, growth options

JEL Classification: G14, G30

Suggested Citation

Dunstan, Keitha L. and Keeper, Trish and Truong, Thu Phuong and van Zijl, Tony, The Influence of Board Structure on the Value of NZX Listed Firms and its Association with Growth Options (August 2011). Available at SSRN: https://ssrn.com/abstract=2028629 or http://dx.doi.org/10.2139/ssrn.2028629

Keitha L. Dunstan (Contact Author)

Bond University - School of Business ( email )

Gold Coast, QLD 4229
Australia

Trish Keeper

Victoria University of Wellington - Te Herenga Waka ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Thu Phuong Truong

Victoria University of Wellington - Te Herenga Waka ( email )

P.O. Box 600
Wellington, 6140
New Zealand
64 4 463 5233 (ext 8961) (Phone)
64 4 463 5076 (Fax)

Tony Van Zijl

Victoria University of Wellington - Te Herenga Waka - Faculty of Commerce and Administration ( email )

RH 606, Pipitea Campus, 6th Floor, Rutherford Hous
23 Lambton Quay
Wellington
Australia

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