Study of Impact of the Ratio of Outside Directors on Corporate Value

Abstract

The purpose of this study is to empirically analyze the effect of the ratio of outside directors on corporate value. As a result of the analysis, it was suggested that the influence of the ratio of outside directors on corporate value is not linear but non-linear. Similar results were obtained in additional verification conducted by classifying companies according to the value of the ratio of outside directors, and analysis using a smoothing spline. In addition, the ratio of outside directors that minimizes corporate value was clarified, and we were able to suggest a guideline for the ratio of outside directors on the board of directors. Furthermore, the range of the ratio of outside directors that has a positive relationship according to this research confirmed the validity of the value of one-third or more required by the revised Corporate Governance Code.