Frauke Steglich (Kiel Institute)
I use the exogenously imposed corporate governance reform in India to analyze whether changes in corporate governance affect firms’ performance. I find that firms affected by the reform experience higher productivity than comparable but non-affected firms. In order to explore potential underlying channels, I rely on a specific aspect of the reform, namely the requirement to have a particular share of independent directors on the board of directors. It appears that firms that had to change their board of directors composition due to the reform – which can be seen as an improvement in management quality – enabled firms to become more productive.
Lecture Hall (A-032)