Monitoring Board Committee Structure and Market Valuation in Large Publicly Listed South African Corporations

International Journal of Managerial and Financial Accounting, Forthcoming

24 Pages Posted: 22 Sep 2013

See all articles by Collins G. Ntim

Collins G. Ntim

University of Southampton Business School, UK; University of Southampton

Date Written: September 21, 2013

Abstract

We examine the association between the presence of monitoring board committees (i.e., audit, nomination, and remuneration) and market valuation in South Africa using a sample of listed corporations. We find a significant positive connection between the presence of monitoring board committees and market valuation, but only in corporations that have independent monitoring board committees and/or all three monitoring board committees that we have investigated simultaneously. This implies that the market values corporations with independent and/or the three monitoring board committees more highly. Our results provide empirical support for agency theory, which indicates that the presence of independent board committees increases the capacity of corporate boards to effectively advise, monitor and discipline top management, and thereby improving market valuation.

Keywords: corporate governance, monitoring board committees, market valuation, endogeneity, South Africa

JEL Classification: G32, G34, G38

Suggested Citation

Ntim, Collins G., Monitoring Board Committee Structure and Market Valuation in Large Publicly Listed South African Corporations (September 21, 2013). International Journal of Managerial and Financial Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2329070

Collins G. Ntim (Contact Author)

University of Southampton Business School, UK ( email )

Southampton Business School
Highfield
Southampton, England SO17 IBJ
United Kingdom
+44 (0) 238059 4285 (Phone)
+44 (0) 238059 3844 (Fax)

HOME PAGE: http://www.southampton.ac.uk/business-school/about/staff/cgn1n11.page

University of Southampton ( email )

Southampton, SO17 1BJ
United Kingdom

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