The influence of blockownership level and identity on board composition: evidence from the New Zealand market

Bruce Burton, Abeyratna Gunasekarage, Jayanthi Kumarasiri

    Research output: Contribution to journalArticle

    3 Citations (Scopus)

    Abstract

    This article explores the relationship between the level and identity of the largest equity blockholding and the proportion of outside directors on the boards of New Zealand corporations between 2002 and 2007, using models that allow for nonlinearity in the relationship as well as interaction between the two exploratory variables. New Zealand provides a unique governance setting for the study, with significant blockholder presence and an inactive (relative to other developed countries) market for corporate control co-existing with a high number of outside directors. The evidence suggests that the proportion of outside directors on New Zealand boards is related to both the level of ownership and identity of the largest blockholder, with the latter influence dominating the former. The evidence regarding blockholder identity suggests that the number of outside directors is likely to be greatest when the stakeholder is governmental or corporate in nature.

    Original languageEnglish
    Pages (from-to)1287-1299
    Number of pages13
    JournalApplied Financial Economics
    Volume23
    Issue number16
    Early online date4 Jul 2013
    DOIs
    Publication statusPublished - 2013

    Keywords

    • block ownership
    • board composition
    • governance mechanisms
    • New Zealand

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