The Effects of Independent Non-Executive Directors (INED) on Company Performance

Abstract

This paper examines the influence of and relationship between independent non-executive directors (INEDs) and the performance of firms listed on the Hong Kong Stock Exchange (SEHK). Many previous studies argue that INEDs can improve corporate governance and firm performance. However, research in this area is ongoing in different countries and stock exchanges and has produced inconsistent conclusions. The results of this study should help in reviewing the suitability of the current INED standards and whether they can be applied to different firm segments in Hong Kong. The paper aims to help policymakers/regulators determine whether further revision of the current INED policy is necessary. The results can be further investigated and applied to other emerging markets/regions worldwide and may be particularly suitable for regions with many family-controlled and state-owned enterprises.