The Effects of Legal Measures to Empower Supervisory Directors
In their article; The Effects of Legal Measures to Empower Supervisory Directors: Evidence from a Financial Distress Perspective, Santen and De Bos discuss the relationship between the corporate governance structure of a company and its financial performance. Until now studies predominantly hypothesize that ‘better’ corporate governance generates better corporate performance. Santen and de Bos consider that the ‘downward performance’-issue, i.e. how does the company handle arising serious financial difficulties, is equally important.
The analysis of Santen and De Bos shows that measures to strengthen the position of supervisory directors, to require a minimum number and a minimum availability, are statistically significantly more often found in the control group of companies than in the financially distressed group. As for measures to ascertain independence and diversity of supervisors, their results suggest that these provisions have the opposite effect. Control companies have less diverse and less independent supervisory boards than financially distressed companies.
The article is titled:
Santen, B.P.A. & A. de Bos, The Effects of Legal Measures to Empower Supervisory Directors: Evidence from a Financial Distress Perspective, Journal of Management and Strategy, 2015(6), p. 45-61.