Do independent directors protect shareholder value?

The present global financial crisis has revived the notion that competitive markets may lead some directors and executives to behave in opportunistic ways considered unethical and even illegal, through the pursuit of self-interest. This article proposes and tests an integrated model that offers new insights into the relationship between board structure, independence and firm value. By incorporating the proportion of independent directors on the board as a moderating factor in this relationship, this study contributes to a better understanding of the entrenchment and convergence-of-interests hypotheses. Using empirical data obtained from 114 Spanish listed companies in a context of economic crisis, from 2007 to 2010, we conclude that having a board with a greater proportion of independent directors reduces the negative association existing between firm value and a large board size and significant board share ownership.