Board Reforms and Employee Downsizing: The Effect of Board Independence on Voluntary Retirement Offers

This study examines how board reforms influence employee downsizing, focusing on the role of board independence in voluntary retirement offers in Japan. Using panel data on Japanese listed firms from 2002 to 2024, we find that higher board independence significantly increases the likelihood of voluntary retirement offers. This effect is stronger in firms with longer employee tenure and in high-performing firms. Furthermore, we find that board independence most strongly increases the likelihood of voluntary retirement offers when high performance aligns with long employee tenure.