Munich Personal RePEc Archive

In Lombard we trust: The value of independent celebrity directors

Cardow, Andrew and Wilson, Willam (2014): In Lombard we trust: The value of independent celebrity directors.

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Abstract Purpose –This paper addresses corporate governance issues around the use of celebrity independent directors in closely held financial institutions. Design/methodology/approach – The authors employ the failure of Lombard Finance, a closely held New Zealand finance company to illustrate the agency conflict between directors, who were nominally independent, and outside debt holders. This approach is taken as New Zealand finance companies were unique in that they are predominantly closely held bank like firms who sourced the bulk of their funds from retail fixed term deposits. Findings The research highlights the conflict inherent when utilising independent celebrity directors as spokespeople for closely held finance companies in a small loosely regulated market. Originality/value This research contributes to the discussion surrounding independent celebrity directors and their influence in the collapse of closely held finance companies at a particular time in recent history.

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