독립적인 이사회는 과잉투자를 억제하는가?

Do Independent Directors Restrain Managers Overinvestment?

This study carefully investigates whether the degree of independence of outside directors effectively reduces the likelihood of managers to over-invest. We further examine how such effect differs between two contrasting groups with distinguished governance structure: Chaebol peer group versus Non-Chaebol peer group. We employed a longitudinal 2,331 firm by year cases to explore the primary research questions, and we applied Biddle et al s mechanism (2009) which suggests the close association between the propensity of corporate over-investment and total investment. The findings show that the higher degree of independence of outside directors is negatively related to the likelihood of managers to over-invest, suggesting that independent outside directors contribute to a long-term corporate value by controlling overinvestment prone to occur after their incumbent directorate term. However, we didn t find that the independent outside directors contribute to reducing the level of total investment among firms which are most likely to under-invest. In addition, we found that independent outside directors contribute to hindering over-investment only in the non-Chaebol group but no evidence in the Chaebol group for the expected relationship, implying that outside directors do not play any role in protecting minority shareholders interest and increasing corporate long-term value in the latter group. This study contributes to the literature by providing evidence for the argument that how outsider directors contribute to corporate value should be considered as not outcomes but inputs. Our study addresses an additional issue that the higher degree of independence of outside directors is likely to actively contribute to monitoring medium- and long-term performance longer than the performance which occurred during the average 3- to 4-year incumbent directorate term.