"Does the Appointment of the Outside Director Increase Firm Value? The Evidence from Taiwan"

We examine the stock market reaction to the announcement of outside director appointments in Taiwan. We employ a sample of 58 outside director announcements made by Taiwan Stock Exchange listed firms during the period 1 January, 1999 to 30 June, 2003. Using this data, we can test some important hypotheses regarding the role of outside directors in conjunction with other conditions for corporate performance in affecting the stock market reactions. Our empirical findings indicate that there exists a significantly positive reaction to the announcements. The cumulative abnormal returns ---one indicator of stock market reaction measured by using the methodology of market model based event study --- reached 4.776%. We also find that the abnormal returns are positive and higher with respect to each of the following characteristics: poorer prior corporate performance, the CEO as chairman of the board, larger free cash flow and a higher degree of information asymmetry. Further, we find that the announcement effect is decreasing as number of outside directors increases. Our findings are different from existing literature, for instance, those of Lin, Pope and Young (2003) and Rosenstein and Wyatt (1990) mainly because the outside director appointment is not mandatory in Taiwan. This suggests that the announcement effects could be different across countries. The appointment appears to be more beneficial for a country with poor corporate governance mechanisms.

Quantum Impurity in Luttinger Liquid: Universal Conductance with Entanglement Renormalization

We study numerically the universal conductance of Luttinger liquids wire with a single impurity via the Muti-scale Entanglement Renormalization Ansatz (MERA). The scale invariant MERA provides an efficient way to extract scaling operators and scaling dimensions for both the bulk and the boundary conformal field theories. By utilizing the key relationship between the conductance tensor and ground-state correlation function, the universal conductance can be evaluated within the framework of the boundary MERA. We construct the boundary MERA to compute the correlation functions and scaling dimensions for the Kane-Fisher fixed points by modeling the single impurity as a junction (weak link) of two interacting wires. We show that the universal behavior of the junction can be easily identified within the MERA and argue that the boundary MERA framework has tremendous potential to classify the fixed points in general multi-wire junctions.Comment: 14 pages, 18 figure