Title: Family pyramidal holdings and board of directors

Authors: Najah Attig

Addresses: Saint Mary's University, Halifax, Nova Scotia B3H 3C3, Canada

Abstract: In this paper we relate the board|s attributes to the firm|s opacity as measured by the adverse selection component of the bid-ask spread. We find that larger boards and outside directors are associated with reduced opacity, especially in freestanding firms. However, directors| excess control is associated with a significant increase in firm|s opacity. We also find that the presence of family pyramidal holding defuses any potential monitoring benefits of board attributes. Our findings suggest that the firm|s ultimate ownership structure is not neutral in determining the monitoring effectiveness of the board of directors. This might help explain existing mixed evidence on the monitoring role of the board of directors.

Keywords: board size; outside directors; opacity; family pyramidal holding; corporate governance; business governance; ownership structure; monitoring effectiveness; board of directors.

DOI: 10.1504/IJBGE.2007.015208

International Journal of Business Governance and Ethics, 2007 Vol.3 No.4, pp.394 - 406

Published online: 26 Sep 2007 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article