Long‐Tenured Independent Directors and Firm Performance†

2021 ◽  
Author(s):  
Stefano Bonini ◽  
Justin Deng ◽  
Mascia Ferrari ◽  
Kose John ◽  
David Gaddis Ross
Keyword(s):  
Firm Performance ◽  
Independent Directors

scholarly journals The Impact of Board Composition on Firm Performance with Reference to Selected Indian Companies

2020 ◽  
Vol 8 (6) ◽  
pp. 2818-2824
Keyword(s):  
Firm Performance ◽  
Significant Relationship ◽  
Financial Services ◽  
Stock Exchange ◽  
Independent Directors ◽  
Board Composition ◽  
Women Directors ◽  
Board Size ◽  
Size Number ◽  
The Impact

This study examines effects of board composition on firm performance among 24 selected companies which are listed on the National Stock Exchange. It strives to understand the influence of corporate governance by testing 3 variables of board composition namely – board size, number of independent directors and the number of female directors on a company’s profitability measured through the tool – Tobin’s Q. One-way Anova test is used to establish a relationship between each of the three variables of board composition with firm profits. The study is conducted over a period of 5 years from 2013 to 2018 and concentrates on the following sectors - Auto, Financial Services, FMCG, IT, Media, Metal, Pharma, and Realty. The results revealed a significant relationship between board size and number of independent directors with firm profits which meant a firm with a greater sized board or more independent directors also showed higher profits in comparison. While, no significant relationship was found between the number of women directors on a firms’ board and firm performance.

scholarly journals Impact of independent directors and remuneration committee on firm performance? Evidence from Malaysian capital market

2010 ◽  
Vol 8 (1) ◽  
pp. 222-225 ◽  
Author(s):  
Huson Joher Ali Ahmed
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Capital Market ◽  
Corporate Performance ◽  
Governance Structure ◽  
Independent Directors ◽  
Corporate Governance Structure ◽  
Regression Methods ◽  
Developed Markets ◽  
Control Management

This study aims at re-examining whether or not the structure of the corporate governance as defined by the non-executive director matter that lead to better performance. This study is based on 100 firms listed in first board. The analysis is based on a period of 5 years from 1999 through 2003. This study employs a multiple regression methods to examine governance structure and its impact on firm performance. Although previous studies in developed markets exhibit the existence of relations between governance structure and corporate performance, this study however concludes that there is partial relation between corporate governance structure and corporate performance. However, the presence of both audit and remuneration committee serves an important monitoring device to control management actives that lead to increase firm’s performance.

scholarly journals The board of directors and firm performance: empirical evidence from listed companies

2019 ◽  
Vol 19 (3) ◽  
pp. 508-551 ◽  
Author(s):  
Alessandro Merendino ◽  
Rob Melville
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Structure ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type

PurposeThis study aims to reconcile some of the conflicting results in prior studies of the board structure–firm performance relationship and to evaluate the effectiveness and applicability of agency theory in the specific context of Italian corporate governance practice.Design/methodology/approachThis research applies a dynamic generalised method of moments on a sample of Italian listed companies over the period 2003-2015. Proxies for corporate governance mechanisms are the board size, the level of board independence, ownership structure, shareholder agreements and CEO–chairman leadership.FindingsWhile directors elected by minority shareholders are not able to impact performance, independent directors do have a non-linear effect on performance. Board size has a positive effect on firm performance for lower levels of board size. Ownership structure per se and shareholder agreements do not affect firm performance.Research limitations/implicationsThis paper contributes to the literature on agency theory by reconciling some of the conflicting results inherent in the board structure–performance relationship. Firm performance is not necessarily improved by having a high number of independent directors on the board. Ownership structure and composition do not affect firm performance; therefore, greater monitoring provided by concentrated ownership does not necessarily lead to stronger firm performance.Practical implicationsThis paper suggests that Italian corporate governance law should improve the rules and effectiveness of minority directors by analysing whether they are able to impede the main shareholders to expropriate private benefits on the expenses of the minority. The legislator should not impose any restrictive regulations with regard to CEO duality, as the influence of CEO duality on performance may vary with respect to the unique characteristics of each company.Originality/valueThe results enrich the understanding of the applicability of agency theory in listed companies, especially in Italy. Additionally, this paper provides a comprehensive synthesis of research evidence of agency theory studies.

Analyzing Performance Implications of Selected Audit Committee Characteristics: A Study of Indian Corporate Sector

2017 ◽  
Vol 5 (2) ◽  
pp. 137-150 ◽  
Author(s):  
Shivan Sarpal
Keyword(s):  
Firm Performance ◽  
Audit Committee ◽  
Research Work ◽  
Performance Measure ◽  
Independent Directors ◽  
Corporate Sector ◽  
Accounting Performance ◽  
Empirical Tests ◽  
Nonlinear Fashion ◽  
Curvilinear Effect

The present research work mainly focuses on the audit committee as a key to ensure a sound corporate governance framework in the companies. The insights from the present research work are a novel attempt to figure out the influence of selected audit committee characteristics on the performance of companies listed in India. Results suggest that audit committee size has a curvilinear effect on firm market valuation having an inflexion point of four directors comprising the members of the audit committee. Furthermore, the independent directors on the audit committee start contributing toward better firm accounting performance only after they constitute more than the majority. The audit committee activity has also demonstrated a significant relationship with firm performance in a nonlinear fashion. The above findings have been robust to the several alternative empirical tests and modifications. It also reveals that the findings solely based upon the linear testing of influence of audit committee characteristics are not conclusive in nature. Moreover, the findings generated from the characteristics of audit committee–firm performance association in this study are contingent upon the nature of performance measure being adopted. In relation to it, suitable implications and propositions have been quoted in the last section so as to offer directions to the interested parties.

The impact of VC backing on the corporate governance of Chinese IPOs

2017 ◽  
Vol 29 (3) ◽  
pp. 330-355 ◽  
Author(s):  
Qing (Sophie) Wang ◽  
Hamish D. Anderson ◽  
Jing Chi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Independent Directors ◽  
Board Independence ◽  
Board Size ◽  
Content Type ◽  
Shareholder Protection ◽  
Political Ties ◽  
The Impact ◽  
Industry Experience

Purpose The purpose of this paper is to investigate how venture capital (VC) backing influences the board size and independence and how VC backing and board structure impact firm performance in China. Design/methodology/approach Using hand-collected data from 924 initial public offering (IPO) prospectuses covering the period from January 2004 to December 2012, the authors investigate the impact of VC backing on board size, board independence and firm market performance through regression analysis. A two-stage approach is also used to address the endogeneity issue. Findings The authors find robust evidence that VC-backed IPOs have more independent boards, after controlling for CEO and firm characteristics, and the potential endogeneity concerns. Furthermore, firms backed by VCs with management political ties (PTs) have more independent directors with industry relevant expertise than other firms. While no significant relationship is found between board independence and firm performance, the authors present some evidence that IPOs which have a larger percentage of independent directors with industry relevant expertise exhibit higher long-term stock returns, and VCs with management PTs also improve IPO long-run stock performance. Research limitations/implications Although VC is new in China and the Chinese capital market has relative poor corporate governance and weak minority shareholder protection, the authors find support in this paper that VC backing is valuable to IPO firms in China not only through providing funding but also by providing political ties and industry experience. However, Chinese regulatory and institutional settings have strong impact on test results and they change rapidly, so the results may not apply to other period in Chinese markets. Originality/value This paper sheds lights on the influences of VC backing on corporate governance and firm performance in a transitional and emerging economy. It discovers the value of VC investors in a transitional economy as of providing political ties and industry experience. The new definition of independent directors suggested by Suchard (2009) is first used by our paper in the Chinese context.

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