The relationship between independent directors and firm’s value has been a more controversial issue of academic research in corporate governance literature. Several empirical studies that examine such relationship  pinpoints to the effects of different facets  of independent directors such as number, proportion, background, characteristics on the firm’s financial performance. In fact, there is no clear-cut answer to this debatable issue because the results of empirical studies on whether the independent directors can improve corporate governance and shareholders’ value are mixed. Generally, there are three types of empirical results in regard to the correlation between independent directors and firm’s financial performance and shareholders’ value, which are either positive or negative or no relation exists between them. In this paper we have attempted a brief literature survey on the role of independent directors on shareholders’ value enhancement.

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Keywords: Corporate Governance, Firm Value, Tobin’s Q, Stakeholders, Interlocking Independent Directors, Shareholders’ Value, Wealth Maximization, Earnings Management.