The Influence of Business Groups on Board Composition in Offshore Financial Multinational Enterprises

Bruce Hearn*, Lars Oxelheim, Trond Randøy

*Corresponding author af dette arbejde

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Based on resource dependence theory we argue for an influence of business groups (BGs) on the board composition of constituent offshore financial multinational enterprises (FMNEs). Using a unique sample of 171 Caribbean FMNEs in an inter-island BG setting, we find BGs’ control in constituent firms to be indicative of the importance of the internal financing and intermediation within the group network. This control leads to a higher proportion of lawyers hired to the boards of directors in BG-constituent firms and supports the argument that lawyers provide skills in complex offshore regulatory frameworks that facilitate BGs’ optimal tax management. Furthermore, we observe that an increased adoption of shareholder rights governance by BG-constituent firms is associated with increased engagement with outside resource providers, increased potential conflicts of interest and hence a need for hiring more lawyers. Our interpretation is that offshore FMNEs have a need for more lawyers, whose legal skill is critical to the competitive advantage of FMNEs.
TidsskriftInternational Business Review
Udgave nummer3
Antal sider17
StatusUdgivet - jun. 2023

Bibliografisk note

Published online: 30 November 2022.


  • Offshore financial MNE
  • Tax havens
  • Offshore
  • Business groups
  • Institutions
  • Caribbean