Independent directors’ dissent on boards and detection of firm violations: empirical evidence from China

ABSTRACT

Using a bivariate probit model that addresses partial observability, I find a positive relationship between independent directors’ dissent on boards and firm violation detection, implying the positive effect of dissent on triggering investigations that bring violations to light. The results provide evidence of a specific channel for independent directors to influence the detection of firm violations and, taking a broader view, to improve corporate governance.

KEYWORDS:

• Independent director
• dissent on boards
• violation
• detection
• China

JEL:

• G34
• L22

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

This work was supported by the Higher Education Discipline Innovation Project under Grant [number B18043].