Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 50, No. 6, pp.1535-1570
ISSN: 1226-1874 (Print)
Print publication date 31 Dec 2021
Received 13 May 2021 Revised 02 Aug 2021 Accepted 03 Aug 2021
DOI: https://doi.org/10.17287/kmr.2021.50.6.1535

대리인문제와 외부감시주체가 여성의 이사회 참여에 미치는 영향

Sang Cheol Lee ; Yunkeun Lee ; Chang Jin Moon
(First Author) School of Business, Ewha Womans University sclee@ewha.ac.kr
(Corresponding Author) College of Business Administration, Dongguk University-Seoul yunkeun69@gmail.com
(Co-Author) Citibank cjmoon9448@naver.com
Effects of Agency Problems and Outside Monitors on the Participation of Female Directors on the Board of Directors


Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study examines the effects of agency problems and outside monitors on the participation of female directors on the board of directors. Analyzing 3,540 non-financial firm-year data listed on the Korea Stock Exchange from 2014 and 2018, we find that women's participation on the board of directors increases in the case of non-owner managed firm with high agency problems between shareholders and managers. We also unveil that when the monitoring incentives of outside monitors such as outside directors, foreign investors and institutional investors increase, the participation of female directors on the board of directors is likely to increase. Furthermore, analyzing 368 non-financial firm-year data of female directors on the board of directors, we find that non-owner manager, affiliated firm of large business groups, the ratio of outside directors on the board of directors and the ownership of both foreign investors and institutional investors have a positive effects on the characteristics of female directors such as the existence of female outside directors, expertise, attendance rate and tenure. The test results of this study indicate that if either agency problems or monitoring incentives of outside monitors are higher, the participation of female directors on the board of directors is likely to increase.

Keywords:

agency problem, outside monitors, the participation of female directors on the board, characteristics of female directors

References

  • Adams, R. and D. Ferreira(2009), “Women in the Boardroom and Their Impact on Governance and Performance,” Journal of Financial Economics, 94(2), pp.291-309. [https://doi.org/10.1016/j.jfineco.2008.10.007]
  • Ang, J. S., R. A. Cole, and J. W. Lin,(2000), “Agency Costs and Ownership Structure,” The Journal of Finance(Feb.), pp.81-106. [https://doi.org/10.1111/0022-1082.00201]
  • Ayuso, S. and A. Argandona(2007), “Responsible Corporate Governance: Towards a Stakeholder Board of Directors?” Paper presented at the 5th National Conference of Ethics of Economics and Organizations.
  • Bacon, J. and J. Brown(1973), “Corporate Directorship Practices: Role, Selection and Legal Status of the Board,” Conference Board Report New York Inc.
  • Bae, K., J. Kang, and J. Kim(2002), “Tunneling or Value Added? Evidence from Mergers by Korean Business Groups,” The Journal of Finance, 57(6), pp.2695-2740. [https://doi.org/10.1111/1540-6261.00510]
  • Ban, H. J.(2015), “The Interaction Effect of CEO Characteristics and Dividend Payout on Investment Expenditures,” Korea International Accounting Review, 59, pp.237-258. [https://doi.org/10.21073/kiar.2015..59.011]
  • Barclay, M. and C. Holderness(1991), “Negotiated Block Trades and Corporate Control,” The Journal of Finance, 46, pp.861–878. [https://doi.org/10.1111/j.1540-6261.1991.tb03769.x]
  • Barker, V. and G. Muller(2002), “CEO Characteristics and Firm R&D Spending,” Management Science, 48(6), pp.782-801. [https://doi.org/10.1287/mnsc.48.6.782.187]
  • Barua, A., L. Davidson, D. Rama, and S. Thiruvadi (2010), “CFO Gender and Accruals Quality,” Accounting Horizons, 24(1), pp.25-39. [https://doi.org/10.2308/acch.2010.24.1.25]
  • Beasley, M.(1996), “An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud,” The Accounting Review, 71 (October), pp.443-465.
  • Beasley, M. and  S. Salterio(2001), “The Relationship Between Board Characteristics and Voluntary Improvements in Audit Committee Composition and Experience,” Contemporary Accounting Research, 18, pp.539-570. [https://doi.org/10.1506/RM1J-A0YM-3VMV-TAMV]
  • Berle, A. Jr. and G. Means(1932), “The Modern Corporation and Private Property,” New York, Macmillan Co..
  • Bonini, S., J. Deng, M. Ferrari, and K. John(2017), “On Long-Tenured Independent Directors,” Working paper. [https://doi.org/10.2139/ssrn.2965588]
  • Carter, D., F. D`Souza, B. Simkins, and G. Simpson (2010), “The Gender and Ethnic Diversity of Us Boards and Boards Committees and Firm Financial Performance,” Corporate Governance: An International Review, 18 (5), pp.396-414. [https://doi.org/10.1111/j.1467-8683.2010.00809.x]
  • Cheng, M., B. Lin, R. Lu, and M. Wei(2017), “Non-Controlling Large Shareholders in Emerging Markets: Evidence from China,” Journal Corporate Finance, 63, pp.101259. [https://doi.org/10.1016/j.jcorpfin.2017.09.010]
  • Cho, Y. G.(2016), “Foreign Ownership and R&D Investment in the Chinese Firms,” International Business Review, 20(4), pp.45-60. [https://doi.org/10.21739/IBR.2016.12.20.4.45]
  • Choi, J. H., S. J. Kim, and S. J. Kim(2003), “An Empirical Study on the Agency Costs and Composition of Outside Directors to the Corporate Board,” Korea Accounting Journal, 12(2), pp.61-86.
  • Choi, J. H., M. S. Kim, and S. H. Hong(2013), “Characteristics of Board of Directors and Investment Efficiency,” Korea International Accounting Review, 50, pp.369-398. [https://doi.org/10.21073/kiar.2013..50.018]
  • Core, J., R. W. Holthausen, and D. Larcker(1999), “Corporate Governance, Chief Executive Officer Compensation and Firm Performance,” Journal of Financial Economics, 51, pp.371-406. [https://doi.org/10.1016/S0304-405X(98)00058-0]
  • Cronqvist, H. and R. Fahlenbrach(2009), “Large Shareholders and Corporate Policies,” The Review of Financial Studies, 22(10), pp.3941-3976. [https://doi.org/10.1093/rfs/hhn093]
  • Dalton, D. and I. Kesner(1987), “Composition and CEO Duality in Boards of Directors: An International Perspective,” Journal of International Business Studies, 18(3), pp.33-42. [https://doi.org/10.1057/palgrave.jibs.8490410]
  • Fama, E.(1980), “Agency Problems and the Theory of the Firm,” Journal of Political Economy, 88(2), pp.288-307. [https://doi.org/10.1086/260866]
  • Fama, E. and M. Jensen(1983), “Separation of Ownership and Control,” The Journal of Law and Economics, 26(2), pp.301-325. [https://doi.org/10.1086/467037]
  • Friedman, E., S. Johnson, and T. Mitton(2003), “Propping and Tunneling,” Journal of Comparative Economics, 31(4), pp.732-750. [https://doi.org/10.1016/j.jce.2003.08.004]
  • Grossman, S. and O. Hart(1980), “Takeover Bids, The Free-Rider Problem and the Theory of the Corporation,” Bell Journal of Economics, 11, pp.42-64. [https://doi.org/10.2307/3003400]
  • Gugler, K., D. C. Mueller, and B. B. Yurtoglu(2008), “Insider Ownership, Ownership Concentration and Investment Performance: An International Comparison,” Journal of Corporate Finance, 14(5), pp.688-705. [https://doi.org/10.1016/j.jcorpfin.2008.09.007]
  • Hampel, R.(1998), “Report of the Committee on Corporate Governance,” Financial Report. London.
  • Ha, Y. B. and S. H. Lee(2014), “The Effects of CEO Characteristics on Firm R&D Investment,” Korea International Accounting Review, 58, pp.103-125. [https://doi.org/10.21073/kiar.2014..58.006]
  • Hill, C. and S. Snell(1988), “External Control, Corporate Strategy and Firm Performance in Research‐Intensive Industries,” Strategic Management Journal, 9(6), pp.577-590. [https://doi.org/10.1002/smj.4250090605]
  • Huang, W. and T. Zhu(2015), “Foreign Institutional Investors and Corporate Governance in Emerging Markets: Evidence of a Split-Share Structure Reform in China,” Journal of Corporate Finance, Forthcoming, 32, pp. 312-326. [https://doi.org/10.1016/j.jcorpfin.2014.10.013]
  • Huse, M. and A. Solberg(2006), “Gender-Related Boardroom Dynamics,” Women in Management Review, 21, pp.113-130. [https://doi.org/10.1108/09649420610650693]
  • Jensen, M. and W. Meckling(1976), “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” Journal of Financial Economics, 3(4), pp.305-360. [https://doi.org/10.1016/0304-405X(76)90026-X]
  • Jiambalvo, J., S. Rajgopal, and M. Venkatachalam (2002), “Institutional Ownership and the Extant to Which Stock Prices Reflect Future Earnings,” Contemporary Accounting Research, 19, pp.117-136. [https://doi.org/10.1506/EQUA-NVJ9-E712-UKBJ]
  • Jiang, J.(2008), “Beating Earnings Benchmarks and the Cost of Debt,” The Accountig Review, 83(3), pp.377-416. [https://doi.org/10.2308/accr.2008.83.2.377]
  • Johnson, S., R. La Porta, F. lorencio Lopez-de-Silanes, and A. Shleifer(2000), “Tunneling,” American Economic Review Papers and Proceedings, 90, pp.22-27. [https://doi.org/10.1257/aer.90.2.22]
  • Kang, K. W.(2019), “The Ratio of Female Executives in 39 Countries Ranked the Bottom...Lower than Pakistan, an Islamic Country,” JoongAng Ilbo, article 15 Oct. 15, 2019.
  • Kang, M. J., S. J. Moon, S. Y. Kwon, Y. H. Kim, and S. R. Bang(2018), “A Study on the Strategies for Expanding the Ratio of Female Executives in the Enterprise,” Korean Women`s Development Institute.
  • Kim, M. T.(2004), “A Magnitude and Direction of Earnings Management by Foreign-Investors in Korea,” Accounting Information Review, 22(4), pp.85-111.
  • Kim, S. I. and J. Y. Hong(2015), “The Effects of the Number of Female Directors on the Board to Corporate Transparency,” Korea International Accounting Review, 59, pp.69-100. [https://doi.org/10.21073/kiar.2015..59.004]
  • Kim, J. C., H. H. Shin, and J. H. Chang(2005), “The Impact of Board Structure and Group Headquarter on Executive Compensation,” Journal of Strategic Management, 8(1), pp.21-38.
  • Klein, A.(2002), “Audit Committee, Board of Director Characteristics, and Earnings Management,” Journal of Accounting & Economics, 33(3), pp.375-400. [https://doi.org/10.1016/S0165-4101(02)00059-9]
  • Labelle, R., R. Gargouri, and C. Francoeur(2010), “Ethics, Diversity Management, and Financial Reporting Quality,” Journal of Business Ethics, 93(2), pp.335-353. [https://doi.org/10.1007/s10551-009-0225-7]
  • Lee, J. Y.(2015), “Influence of EU Measures in Improving Gender Balance on French Corporate Board of Directors,” Institute for EU Studies, 39, pp.255-281. [https://doi.org/10.18109/jeus.2015..39.255]
  • Lee, M. Y.(2020), “Expanding Women's Participation in Management-The Future of the Board of Directors to Hold a Forum on the 4th Anniversary of the Foundation of the World Women's Directors Association,” Seoul Shinmun, article 23 Nov. 2020.
  • Lee, S.(2015), “Corporate Governance and Firm Performance; Evidence from Institutional Investors and Proxy Voting in Korea,” Hitotsubashi Journal of Economics, 56, pp.35-53.
  • Lee, S. C. and J. C. Yoon(2017), “Effects of Audit Committee's Quality and Characteristics on Audit Firms,” Korea International Accounting Review, 72, pp.151-186. [https://doi.org/10.21073/kiar.2017..72.007]
  • Lee, S., M. Rhee, and J. Yoon(2018), “Foreign Monitoring and Audit Quality: Evidence from Korea,” Sustainability, 2018, 10, 3151, pp.1-22. [https://doi.org/10.3390/su10093151]
  • Lee, S. and J. Kim(2009), “An Effect of Foreign Monitoring on Agency Costs and Firm Value,” Korean Journal of Management Accounting Research, 9(1), pp.95-133.
  • Liao, L., L. Luo, and Q. Tang(2015), “Gender Diversity, Board Independence, Environmental Committee and Greenhouse Gas Disclosure,” The British Accounting Review, 47(4), pp. 409-424. [https://doi.org/10.1016/j.bar.2014.01.002]
  • Lim, K. I.(2012), “Relationship between the Ratio of Female Executives and Management Performance within the Board of Directors,” Corporate Governance Service, pp.7-9.
  • Lim, H. K., E. Y. Cho, and S. Y. Ko(2014), “Influence of Outside Director’s Expertise on Firm Value and Business Performance,” The Journal of Korea Tax Accounting Research, 39, pp.83-102. [https://doi.org/10.35349/tar.2014..39.005]
  • Marinova, J., J. Plantenga, and C. Remery(2016), “Gender Diversity and Firm Performance: Evidence from Dutch and Danish Boardrooms,” The International Journal of Human Resource Management, 27(15), pp.1777-1790. [https://doi.org/10.1080/09585192.2015.1079229]
  • McNeil, C., G. Niehaus, and E. Powers(2002), “Management Turnover in Subsidiaries of Conglomerates versus Stand-Alone Firms,” Working Paper, University of South Carolina. [https://doi.org/10.2139/ssrn.296220]
  • Menon, K. and J. Williams(1994), “The Use of Audit Committee for Monitoring,” Journal of Accounting and Public Policy, 14, pp.121-139. [https://doi.org/10.1016/0278-4254(94)90016-7]
  • Modigliani, F. and M. Miller(1963), “Corporate Income Taxes and The Cost of Capital: A Correction,” The American Economic Review, 53(3), pp.433-443.
  • MOGEF(2019), “As of Q1 2019, 4.0% Female Executives, 3.1% Female Outside Directors, Ministry of Gender Equality and Family, press release of 16 Oct. 2019.
  • Nekhili, M. and H. Gatfaoui(2013), “Are Demographic Attributes and Firm Characteristics Drivers of Gender Diversity? Investigating Women’s Positions on French Boards of Directors,” Journal of Business Ethics, 118, pp.227-249. [https://doi.org/10.1007/s10551-012-1576-z]
  • Okubo, T., A. Wagner, and K. Yamada(2017), “Does Foreign Ownership Explain Company Export and Innovation Decisions?” Discussion Paper Series 17-E-099; Research Institute of Economy, Trade and Industry, Tokyo, Japan.
  • Park, J. I., K. A. Jeon, J. H. Choi, and C. W. Park (2009), “The Role of Large Auditors in Restricting the Earnings Management by Largest Shareholders` and Foreign Investors` Ownership,” Accounting Information Review, 27(1), pp.201-229.
  • Pearce II, J. and S. Zahra(1992), “Board Composition from a Strategic Contingency Perspective,” Journal of Management Studies, 29(4), pp. 411-438. [https://doi.org/10.1111/j.1467-6486.1992.tb00672.x]
  • Rajgopal. S., M. Venkatachalam, and J. Jiambalvo (1999), “Is Institutional Ownership Associated with Earnings Management and The Extent to Which Stock Prices Reflect Future Earnings?” Working Paper, University of Washington. [https://doi.org/10.2139/ssrn.163433]
  • Reguera-Alvarado, N., P. Fuentes, and J. Laffarga (2015), “Does Board Gender Diversity Influence Financial Performance? Evidence from Spain,” Journal of Business Ethics, 141, pp.337-350. [https://doi.org/10.1007/s10551-015-2735-9]
  • Ross, S.(1977), “The Determination of Financial Structure: The Incentive-Signalling Approach,” The Bell Journal of Economics, 8(1), pp.23-40. [https://doi.org/10.2307/3003485]
  • Shin, J. Y. and D. H. Byun(2002), “A Study on Ownership Structures and Agency Costs,” Korea Accounting Journal, 11(3), pp.67-87.
  • Shin, H. H. and J. H. Jang(2003), “Firm Performance Following CEO turnover,” The Korean Journal of Finance, 16(2), pp.231-256.
  • Shleifer, A. and R. Vishny(1986), “Large Shareholders and Corporate Control,” Journal of Political Economy, 94(3), pp.461-488. [https://doi.org/10.1086/261385]
  • Siegel, J.(2007), “Contingent Political Capital and International Alliances: Evidence from South Korea,” Administrative Science Quarterly, 52(4), pp.621-666. [https://doi.org/10.2189/asqu.52.4.621]
  • Solimene S., D. Coluccia, and S. Fontana(2017), “Gender Diversity on Corporate Boards: An Empirical Investigation of Italian Listed Companies,” Palgrave Communications, 3 (16109). [https://doi.org/10.1057/palcomms.2016.109]
  • Song, D. S. and J. W. Shin(2017), “The Effect of CEO’s Characteristic on the Audit Quality,” The Journal of Business Education, 31(2), pp.27-55.
  • Srinidhi, B., F. Gu,l and J. Tsui(2011), “Female Directors and Earnings Quality,” Contemporary Accounting Research, 28(5), pp.1610-1644. [https://doi.org/10.1111/j.1911-3846.2011.01071.x]
  • Terjesen, S., R. Sealy, and V. Singh(2009), “Women Directors on Corporate Boards: A Review and Research Agenda,” Corporate Governance: An International Review, 17(3), pp.320-337. [https://doi.org/10.1111/j.1467-8683.2009.00742.x]
  • Vafeas, N.(1999), “Board Meeting Frequency and Firm Performance,” Journal of Financial Economics, 53(1), pp.113-142. [https://doi.org/10.1016/S0304-405X(99)00018-5]
  • Weisbach, M.(1988), “Outside Directors and CEO Turnover,” Journal of Financial Economics, 20, pp.431-460. [https://doi.org/10.1016/0304-405X(88)90053-0]
  • Xie, B., W. Davidson III, and P. DaDalt(2003), “Earnings Management and Corporate Governance: The Role of the Board and the Audit Committee,” Journal of Corporate Finance, 9(3), pp.295-316. [https://doi.org/10.1016/S0929-1199(02)00006-8]
  • Yermack, D.(1996), “Higher Market Valuation of Companies with a Small Board of Directors,” Journal of Financial Economics, 40, pp. 185-211. [https://doi.org/10.1016/0304-405X(95)00844-5]

∙ The author Sang Cheol Lee is currently a professor of accounting at School of Business, Ewha Womans University. He serves as a member of Corporate Governance Research Committee, Korea Corporate Governance Service and an outside director of Meritz Securities. He was the editor at Korean Journal of Management Accounting Research and Samjong- KPMG ACI Professor. He was also an outside director and the chairman of audit committee at Korea Investment Holdings and Korea Investment & Securities. He received his undergraduate, MS and Ph.D. degree in business administration at Yonsei University. Prof. Lee’s research focuses on corporate governance, budget, performance evaluation, and manager compensation.

∙ The author Yunkeun Lee is an adjunct professor at Department of Accounting, Dongguk University. He will serve as an assistant professor at School of Business, Ajou University. He received his undergraduate degree in applied statistics at Yonsei University, MBA degree in KAIST, and Ph.D. in accounting from Dongguk University. He is interested in corporate governance, performance evaluation, and manager compensation.

∙ The author Chang Jin Moon is a manager at Citibank. He received his undergraduate degree in business administration at Hongik University, MBA degree in Korea University, and Ph.D. in accounting from Dongguk University. He is interested in issues of financial accounting and corporate governance structure.