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2022 | OriginalPaper | Chapter

6. Constraints Diluting the Effectiveness of Board Independence

Authors : Shveta Singh, Monika Singla

Published in: Corporate Governance Mechanisms and Firm Performance

Publisher: Springer Nature Singapore

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Abstract

The current chapter deals with the analysis of third broad objective of the study. This objective is related to the empirical analysis of factors which can explain the ineffectiveness of independent directors in India.

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Appendix
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Footnotes
1
The transfer of resources away from the firm for the benefit of the controlling shareholders (Johnson et al., 2000).
 
2
The structures in which an ultimate controlling firm controls several listed companies, each of which controls yet more listed companies, each of which controls yet more listed companies, and so on (Morck et al., 2005). A control pyramid allows a wealthy family or individual to control a large number of firms with relatively limited wealth. Pyramids permit this by creating large deviations between voting rights and cash flow rights; allowing control over many firms with a small cash flow stake in each.
 
3
Dual-class shareholding refers to the ownership structure where different classes of shares carry differential voting rights (Li et al., 2008).
 
4
Board inter-lock refers to the practice wherein the members of the corporate boards serve on the boards of multiple corporation. Davis (1996) contends that “the aggregate result of this practice virtually links all the firms into a single network based on the shared board members”.
 
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Metadata
Title
Constraints Diluting the Effectiveness of Board Independence
Authors
Shveta Singh
Monika Singla
Copyright Year
2022
Publisher
Springer Nature Singapore
DOI
https://doi.org/10.1007/978-981-19-2460-6_6