Independent directors' dissent on boards and detection of firm violations: empirical evidence from China

Using a bivariate probit model that addresses partial observability, I find a positive relationship between independent directors' dissent on boards and firm violation detection, implying the positive effect of dissent on triggering investigations that bring violations to light. The results provide evidence of a specific channel for independent directors to influence the detection of firm violations and, taking a broader view, to improve corporate governance.

Automated summary

This study uses a bivariate probit model to show a positive relationship between independent directors' dissent on boards and firm violation detection, suggesting that dissent has a positive effect on initiating investigations and uncovering violations.