Determinants of good governance practices: the role of board independence

  1. Álvaro Melón-Izco 1
  2. Francisco J. Ruiz-Cabestre 1
  3. Carmen Ruiz-Olalla 1
  1. 1 Universidad de La Rioja
    info

    Universidad de La Rioja

    Logroño, España

    ROR https://ror.org/0553yr311

Journal:
Revista española de financiación y contabilidad

ISSN: 0210-2412

Year of publication: 2020

Volume: 49

Issue: 3

Pages: 370-393

Type: Article

DOI: 10.1080/02102412.2019.1655336 DIALNET GOOGLE SCHOLAR

More publications in: Revista española de financiación y contabilidad

Abstract

This study contributes to broadening our knowledge of the corporate governance of firms. In particular, we consider board independence as a fundamental variable in the explanation of good governance practices. For this purpose, we analyse the Annual Corporate Governance Reports of the Spanish listed companies on the Continuous Market of the Madrid Stock Exchange during the period 2010–2016. The results for all companies reveal that firm size, ownership dispersion and board independence have a positive relationship with good practices, and the relationship between board independence and good governance practices is moderated by ownership dispersion. When we distinguish between firms that comply with board independence recommendation and those that do not, however, the results differ substantially, in terms of sign, magnitude and significance level. This highlights the importance of board independence in explaining good governance practices.

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