Nonlinear Effect of Independent Directors on Company Performance

There are a large number of the researches indicated positive sign of the independence impact as well as negative impact detections, but there is a gap in the detection of the sing and correspondingly the of the relation. In correspondence with literature about an optimal board structure current study analyzes various features of independent directors and its coordination with exogenous factors and ownership structure, board of directors size and the probability of winning coalitions formation against independent directors and comes to the conclusion of the existence of significant reverse U-shape relation between board independence and corporate performance on developed markets. As for emerging the relation is affected by market specific factors as high ownership concentration and owners involvement into the decision-making process. The study also indicates the endogeneity of independent directors share on developed markets. The research is based on the sample of emerging countries including Russia, Brazil and South Africa and European developed countries (France, Italy, Spain and Portugal) during 10 years from 2005 to 2014.