Are Outside Board Chairs Better Than Inside Board Chairs? Evidence From Taiwanese Family Firms

Abstract

This paper compares the effect of inside and outside board chairs on firm performance using listed family firms in Taiwan from 2000 to 2018. We use Tobin’s Q and Return on Assets to measure firm valuation and operating performance. Family firms with an inside board chair exhibit undervaluation but better operating performance compared to family firms with an outside board chair. However, these results are nuanced and complex, with board independence counteracting on inside board chair. The results are robust using different samples and performance measures.