The effect of the internationalization process in the board of directors: With a Danish perspective

Jonas Skovsted-­Andersen

Student thesis: Master thesis


The analysis included eight corporations from four different countries, who were analyzed over a period from 2000 – 2009. By using Hofstede´s cultural dimensions, were different characteristics of each nationality represented in one of the boards highlighted in order to discuss how these could have influenced the payout strategy. A quantitative analysis found evidence supporting that in recent years; Danish corporations have increased their total payout, and were in general attached a higher price-to-earnings ratio. It was concluded that the latter was a result of the investor´s larger trust in the Danish corporation´s ability to create higher future net incomes than their competitors. However, the different corporate governance declarations stressed that the emphasis put on each corporations long-term commitment, as well as this should be secured before allocating capital to the investors, were very different. The results support, that the Danish corporations in general outperformed their foreign competitors. In total, the Danes created an excess shareholder return in 22 years compared to only 18 years by the competitors. It can be inferred, that the Danish corporations were better at outlining how a long-term profitability was secured, while signals containing future expectations were sent through increased payouts; using both dividends and share buyback programmes. The market incorporated these signals into their expectations, which the Danish corporations in general were able to outperform in 22 years. Therefore, nominating a broader range of foreign board members, instead of electing some with an in-depth knowledge about a market with significance importance to the corporations, has no effect on the value creation. What seems to have effect is a strong link between the corporate governance declaration and the payout policy; the signals sent with the payout, and it does not matter the national culture, because the market will incorporate the indicated signals. Curiosity might be good, but too much might destroy the shareholder value

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2010
Number of pages118