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Chu-Yang Chien, Yuh-Jiuan Parng, Chen-Wei Lu


The Financial Supervisory Commission in Taiwan has advocated the importance of corporate governance for several years. The purpose of this study is to act in concern with the policy through the test of the relationship between the corporate governance mechanism, especially Board of Directors’ composition and ownership structure, and the involuntary delisted firms. The study extracts 58 involuntary delisted firms from Taiwan Securities Exchange (TSE) during 1997 to 2007 and matches with 112 similar control firms. The results from probit regression suggest that Board of Directors (BOD) with more number of outside independent directors, larger board size, lower ratio of shares pledged to the total shares, higher seats over control right, and lower control right over right for cash flow may reduce the likelihood of delisting. The study could become monitoring indices for internal examination system, the warning signals for investors, and the reference for the policy makers.

Keywords: Corporate Governance, Involuntary Delisted Firms, Board of Directors, Gray Directors, Pledged Shares

How to cite this paper: Chien, С.-Y., Parng, Y.-J., & Lu, C.-W. (2009). Corporate board, ownership structure and the involuntary delisted firms. Corporate Ownership & Control, 6(4-3), 370-381.