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Abstract

The ‘independent director’ was introduced as a corporate governance tool in the United States in the 1970s and quickly spread to the United Kingdom and from there to Continental Europe and Asian economies. The research presented in this video examines whether this legal transplant works in economies that have different shareholder structures and thus different agency conflicts than the US, and asks why these countries adopted it. Using comparative analysis, HARALD BAUM explains, the researchers discovered that – depending on the context – the independent director can be an almost meaningless tool. They also found that countries were impelled to introduce the concept due to a competition for funds from international investors and organizations that work on American principles of corporate governance. The research results suggest that a greater variety of regulatory tools might be fruitful for the international market.