Crisis Transmission and Governance: Evidence from East Asian Countries

International audienceThe purpose of this paper is to study the impact of the board of directors' structure on the firms' ability to resist the Asian Stock Market crisis. This ability is assessed by minimizing the financial returns' conditional volatility estimated by the ARCH and GARCH specifications. Using a data from 94 listed and industrial firms in four East Asian countries: Malaysia, Thailand, Indonesia and the Philippines between 1996 to 1998, the results show that the board size and the presence of independent directors are negatively linked to the conditional volatility of the financial returns. These results are compatible with the argument which suggests that the efficient boards enhance the managers' ability to control and that of the firms to withstand the crisis. The leadership structure would be without any effect on the resistance to the crisis and the Chief Executive Officer' turnover would have a positive impact on the volatility of the financial returns. Our research provides both researchers and practitioners with insights to enrich the financial and economic literature regarding the efficient corporate governance mechanisms and to help take corrective measures in order to impede the active and opportunistic behaviours of managers in a period of crisis