Background: The existing body of research on corporate governance has thoroughly investigated the function of external directors in large, publicly traded companies, predominantly from the perspective of agency theory. Nevertheless, research on non-executive directors in SMEs, especially in countries other than the U.S is relatively few. As SMEs encounter unique difficulties as a result of their informal ownership arrangements and reduced legal obligations in comparison to publicly traded firms, it provides an opportunity for further analysis.  Purpose: The purpose of this thesis is to explore the influence of contingency factors on external directors. Further, the purpose is to explain the self-perception of external directors’ roles, and therefore be able to scrutinize and validate if external directors perceive to engage in similar roles as identified in the public context.  Method: This study adopts a epistemological positivist stance along with a deductive approach to quantitatively explore and explain how external directors' perceptions of their board role are contingent on certain factors. A survey is used to collect data, where the data is analyzed by employing Spearman correlation and multiple linear regression.  Conclusion: The findings of this thesis suggests that that external directors’ perception of the control, strategic and the combinatory multi-perspective role is affected by ownership, number of external directors in the board, business life cycle and size of firm that could explain variances in the support for these roles. The thesis also found support for both agency theory and RDT, however, the study did not found support for the contingencies developed to explore external directors service role.

This dissertation consists of three essays examining the relation between corporate governance and firm performance. The theme of this study is that the widely documented long-term underperformance in equity carve-outs can be partly explained by weak corporate governance. The first essay presented in Chapter 2 explores the effect of shareholder-rights protection on the performance of a sample of firms that initiated a carve-out during the period 1983-2004. Using the Gompers, Ishii, and Metrick (2003) index and Bebchuk, Cohen, and Ferrell (2004) entrenchment index, as proxies for the quality of shareholder-rights protection, I provide evidence that firms with better shareholder rights protection outperform those with weaker rights protection. Results indicate that the weaker the rights protection, the greater the degree of underperformance. Overall, the results are robust to measures of firm performance and to model specification. The second essay presented in Chapter 3 examines the relation between firm performance and board structure. In particular, I study how board size, board independence, and CEO duality influence firm performance. I find that board size for non-financial firms is negatively related to firm performance but positively associated with performance for financial firms. Board independence is positively related to firm performance and CEO duality is negatively associated with performance for both financial and non-financial firms. These results are robust to various measures of firm performance. The conflicting evidence on board size, between financials and non-financials, seems to suggest that the scope and complexity of a firm.s operations drives board size. The third essay presented in Chapter 4 investigates corporate ownership and firm performance. I focus on insider ownership, outside blockholder ownership, and ownership concentration. Results show that insider ownership is negatively related to firm performance even at low levels of insider ownership levels. It is plausible that the combination of parent ownership and management ownership in the subsidiary exacerbate the entrenchment effect thus overwhelming the incentive alignment effects that theory posits. I document a positive relation between outside blockholder ownership and firm performance. And finally, I show that the level of ownership concentration increases (decreases) in anticipation of positive (negative) changes in firm performance.