Board Independence

Board Independence

The state in which all or a majority of the members of a board of directors do not have a relationship with the company except as directors. For example, they may not be relatives of the company's founders, key players or major employees. In the United States, the SEC and individual exchanges require board independence.
References in periodicals archive ?
The authors found that impact of board directors on organizational performance are mixed and obtained positive relation of board directors having higher level of accountability with company performance but obtained negative correlation of board independence with business performance.
Shah and Butt (2009) analyzed the influence of board size, independence of audit committee, managerial ownership, corporate governance score and board independence on cost of equity in Pakistan by utilizing data of 2003 to 2007 for 114 companies listed at KSE.
Board independence is even more important in markets dominated by families in order to strengthen oversight, risk control and company performance in the long run, according to Warren Chen, Asia-Pacific research head at Institutional Shareholder Services, Inc.
"However, there is widespread anxiety over proposals in the legislature to add additional legislative appointees to the board and over other legislative proposals that would limit board independence. 'There is enough board politics small p now,' we were told.
Board independence was measured as the proportion of independent directors to the total (Millstein and MacAvoy 1998; Fama and Jensen 1983).
(2013) claim that there is no significant impact of board independence on firm dividend ratio.
Yet if board independence in any context can be problematic, co-management boards and their members are, almost by definition, subject to endemic challenges to their independence.
Hypothesis 3: Board independence moderates the relationship between religiosity and corporate illegal activity, such that the negative effects of religiosity on corporate illegal activity will be stronger in organizations with more independent boards.
In fact, inkeeping with CBS's and NAI's commitment to board independence, five current independent directors and one NAI-affiliated director have stepped down from the CBS board.
In keeping with CBS' and NAI's commitment to Board independence, five current independent directors and one NAI-affiliated director have stepped down from the Board, and six new independent directors have been elected to the Board.
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Insurance commissioner Dennis Funa said improving the criteria in the selection of independent directors would ensure board independence and improve governance in these companies.