Corporate Governance and Firm Performance: Evidence from the Oil Price Collapse of 2014-15

This paper analyses how board classification, board independence, and inside ownership affects US oil-company performance using the oil price collapse of the autumn and winter of 2014 as a natural experiment. Firms with classified boards suffered during the collapse. An important source of value destruction is that classified boards aggravated the impact of corporate risk taking on performance. On the contrary, the greater the ownership level of insiders, the better the firm sustained the crisis. The performance-ownership relationship seems to be non-monotonic. In particular, inside ownership mediates the impact of leverage on performance. As for board independence, it seems to be of no relevance to firm performance.