THE IMPACT OF CORPORATE OWNERSHIP ON UNITARY BOARD INDEPENDENCE: EVIDENCE FROM BANGLADESH

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Md Shamimul Hasan Normah Omar Morrison Handley-Schachler Mohamed A Omran

Abstract

Board independence is an important corporate governance element andwithout good governance it is impossible to form a unitary board system.After the crash in Bangladesh in 2011, it becomes a major issue for publiclisted companies in Bangladesh to follow a unitary system. This studyaddresses the issue by examining statistical relationship between corporateownership and board independence. Descriptive statistics, bivariate analysisand multiple regression techniques are applied in analyzing the attitudesof family, public and institutional owners towards board composition, thedegree of influence each type of owner has on board and the presence goesbeyond board independence. The results show that board are lacking inindependence and family ownership has a significant, negative effect onboard independence, in which the results indicate that public and institutionalownership have a positive, nonsignificant influence. It is recommended forprofessionals to be included on board and that nonexecutive directors shouldbe selected by a search committee to ensure that their competency matchesthe firm needs. It is further recommended that there should be a minimumof two independent directors and that management should be motivated,in line with the positive reinforcement theory. The German or Japanesemodel (two-tier board) can also be considered. This study also suggeststhat regulators should rethink how an independent and professional boardcan be formed when the barrier of concentrated ownership is removed.Keywords: Corporate governance, board independence, family ownership,corporate ownership, Bangladesh

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How to Cite
HASAN, Md Shamimul et al. THE IMPACT OF CORPORATE OWNERSHIP ON UNITARY BOARD INDEPENDENCE: EVIDENCE FROM BANGLADESH. Management & Accounting Review (MAR), [S.l.], v. 15, n. 1, p. 1-27, june 2016. ISSN 2550-1895. Available at: <http://arionline.uitm.edu.my/ojs/index.php/MAR/article/view/557>. Date accessed: 22 july 2018.
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