The Relation Between Firm Ownership Structure and Board of Director Independence: An International Meta-Analysis

Prior research into the relationship between firm ownership structure and board of director independence has been conducted in a variety of international settings and has led to mixed results. Given this divergence, we meta-analyze 127 studies in order to test whether different types of owners (if a firm's ownership lies mainly in the hands of managers, families or institutions) explain these mixed results. We also examine whether the institutional context (civil, common or emerging legal system) may moderate the relationship between ownership concentration and type of owner and board independence. We find that ownership concentration has a weak but significant negative relation with board independence in common law countries, and when firms are under managerial or family control. In contrast, the relation is positive for firms in civil law countries or for firms owned by institutional investors. Thus, our paper reveals differences in the relation between ownership concentration and board of director independence conditional on type of owner and the institutional context in which the firm operates. Our research has practical implications for practitioners and policy makers, and provides them with certain guidelines aimed at achieving the most efficient design for corporate governance mechanisms.