Chapter 14 Nonexecutive director influence on informational asymmetries in offshore financial centres
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This is a study of the relationship between non-executive director personal ownership and firm's bid ask spreads in listed firms from 179 firms listed on eight Caribbean offshore securities exchanges. We report that bid ask spreads increase with non-executive director ownership. However, this result is reduced (negatively moderated) in the context of higher formal institutional quality and also if the territory has a fixed exchange rate regime, but exacerbated (positively moderated) if firm is located within an offshore jurisdiction. The effectiveness of non-executive directors is highly contingent upon the specific institutional context. Higher formal institutional quality and the presence of a strong macroeconomic tie between territory and OECD country leads to a reduction in these costs, while offshore financial centres lead to their increase. The results support regulator's focus on board of director composition and in particular nonexecutive remuneration in the form of ownership.

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