scholarly journals Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

2019 ◽  
Vol 11 (24) ◽  
pp. 7121
Author(s):  
Eugenio Zubeltzu-Jaka ◽  
Eduardo Ortas ◽  
Igor Álvarez-Etxeberria
Keyword(s):  
Financial Performance ◽  
Organizational Performance ◽  
Independent Directors ◽  
Corporate Financial Performance ◽  
Board Independence ◽  
Financial Success ◽  
Negative Effect ◽  
Institutional Contexts ◽  
New Evidence ◽  
The Way

This study not only revisits, from a meta-analytic perspective, the influence of firms’ boardroom independence on corporate financial performance, but also addresses the way that countries’ social and institutional contexts moderate that connection. A meta-regression covering 126 independent samples reveals that firms’ boardroom independence has a positive and negative effect on accounting and market-based measures of corporate financial performance, respectively. Further analyses reveal that while the firms’ board independence-financial performance connection is stronger in non-communitarian societies, that relationship becomes weaker in countries with greater developed mechanisms to protect the interest of minority investors. These results are robust to different model specifications and to the presence of a set of methodological control variables. Our results are of outstanding relevance for companies’ board composition processes by suggesting the way that corporations should actively re-balance the proportion of independent directors across different social and institutional contexts to ensure their financial success.

scholarly journals The impact of directors’ tenure on executive compensation and corporate financial performance

2013 ◽  
Vol 10 (2) ◽  
pp. 164-172
Author(s):  
Sylvie Berthelot ◽  
Julien Bilodeau ◽  
Katy Davignon
Keyword(s):  
Financial Performance ◽  
Executive Compensation ◽  
Positive Impact ◽  
Independent Directors ◽  
Corporate Financial Performance ◽  
Senior Executives ◽  
Corporate Executives ◽  
The Impact

This research examines the impact of the tenure of independent directors on senior executives’ compensation and corporate financial performance. We assume that as the term of tenure or seniority of directors usually defined as “independent” increases, their independence can become compromised because of the relationships they build with corporate executives. The results show that although the tenure of independent directors has a positive impact on senior executives’ compensation, it has no significant impact on corporate financial performance. This result tends to support the contention that seniority should be taken into account in studies using director’s independence as a variable

scholarly journals The Effect of Leverage and Debt Maturity on the Corporate Financial Performance: Evidence from Non Financial Firms Listed at Pakistan Stock Exchange

2021 ◽  
Vol 3 (1) ◽  
pp. 35-47
Author(s):  
Naveed Khan ◽  
Hamid Ullah ◽  
Mustafa Afeef
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Debt Maturity ◽  
Corporate Financial Performance ◽  
Current Ratio ◽  
Financial Firms ◽  
Insignificant Effect ◽  
Sale Growth ◽  
Negative Effect

Purpose This study examined the effect of leverage, debt maturity on corporate financial performance of non-financial firms listed at the Pakistan Stock Exchange. Targeted population of this study was 100 firm listed at PSX as KSE-100 index out of which 74 non-financial firms were selected from 28 different sectors for the period of 5 years 2013 to 2017. Design/Methodology/Approach: Financial performance measured by ROA, ROE, while leverage, short term leverage, long term leverage taken as independent variables, four variables were taken as control which are size, current ratio, sale growth, tangibility. On the basis of Hausman test, results of random effect model were found appropriate. Findings: ST and LT Leverage have a negative significant and insignificant effect on financial performance (ROA) respectively, moreover long term leverage has a positive and significant but short has a negative and insignificant effect on ROE. The results of the control variables showed that size has a negative and significant effect on ROA and ROE, whereas current ratio has insignificant and negative effect on ROA, ROE. Sale growth has a positive and insignificant effect on firms ROA and ROE. Tangibility has insignificant and negative effect on financial performance. Implications/Originality/Value: This study is consistent with traditional trade-off theory and recommended that management of the non-financial firms listed at the PSX should employ minimal debt level or use an optimal level of capital structure and also to attract good management thus to improve their financial performance.

scholarly journals Impact of Interaction Between the Board of Directors and the Reputation of the Audit on the Performance of Companies: Study on the Tunisian Context

2018 ◽  
Vol 8 (4) ◽  
pp. 287
Author(s):  
Emna Boumediene
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Board Of Directors ◽  
Substitution Effect ◽  
Board Independence ◽  
External Audit ◽  
The Board Of Directors ◽  
Negative Effect ◽  
The Impact ◽  
Empirical Analyses

This research aims to test the impact of the interaction between the external audit reputation and the characteristics of the board of directors on the firm performance. Hence, we have tried to test the hypothesis of Williamson (1983) in the Tunisian context.The results obtained in the empirical analyses show a significantly negative effect of the interaction between the external audit reputation and the board independence of the financial performance of the firm. This result reveals the substitution effect between these two mechanisms.

scholarly journals BOARD DIVERSITY AND FINANCIAL PERFORMANCE IN INDONESIA

2021 ◽  
Vol 2 (2) ◽  
pp. 86-95
Author(s):  
Werner Ria Murhadi ◽  
Deliana Azaria ◽  
Bertha Silvia Sutedjo
Keyword(s):  
Financial Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Independent Directors ◽  
Board Independence ◽  
Board Diversity ◽  
Company Value ◽  
Large Size ◽  
The Board Of Directors ◽  
The Relationship

Corporate governance has attracted many researchers to examine the relationship between board characteristics and financial performance. This study aims to determine the effect of board diversity, board size, and board independence on financial performance. This research is panel data with the number of observations reaching 1,355 years of observation. Financial performance is measured using accounting-based and market-based. It was found that the presence of female directors could not provide sound financial performance, even with a woman's prudence attitude would have an impact on decreasing the company's market value. The size of the board of directors does not affect financial performance, and the large size of the board of directors will have an impact on the decline in firm value. Independent directors are also not proven to be able to improve the company's financial performance; even the tendency of companies to carelessly fulfill the provisions of the rules regarding the existence of independent directors will bring a burden to the company so that it has an impact on the decline in company value.

scholarly journals Capital Structure, Financial Performance, and Sustainability of Micro-Finance Institutions (MFIs) in Bangladesh

2020 ◽  
Vol 12 (15) ◽  
pp. 6222
Author(s):  
Syeda Sonia Parvin ◽  
Belayet Hossain ◽  
Muhammad Mohiuddin ◽  
Qingfeng Cao
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Organizational Performance ◽  
Random Effect ◽  
Financial Sustainability ◽  
Net Income ◽  
Negative Effect ◽  
Development Goals ◽  
And Performance ◽  
The Relationship

Capital structure plays an important role in organizational performance. Sources of funds for micro-finance institutions (MFIs) and their performance and financial sustainability become an important topic for the MFIs and poverty alleviation initiatives to achieve sustainable development goals of the UN. We explored the following question: Does the financial structure in terms of financial leverage affect the financial performance: Financial sustainability, depth, and breadth of outreach of MFIs? Our research focuses on studying the relationship between capital structure and financial performance of micro-finance institutions as well as achieving the objectives of this program by reaching out to the deserving clients without collaterals. A dataset of 187 MFIs is used to establish the relationship between the capital structure and performance of MFIs. Panel data regression analysis has been used for this study using the Random effect and Fixed effect models. Return on Asset (ROA), and Net Income to Expenditure (NIER) have been used as measures of financial performance. The findings indicate that Equity to Asset Ratio (EAR), Debt to Loan Ratio (DTL), Risk, and Size are the factors that influence NIER. Furthermore, EAR, and DTL have a positive effect on ROA, and Risk has a negative effect. The findings of this study will enable MFIs to configure their capital structure by creating a portfolio of sources of their capital from market-based sources of funds that can maximize their financial performance and reach out to poor clients without collaterals.

scholarly journals Board quality and the performance of Indonesian listed companies

2011 ◽  
Vol 7 (1) ◽  
pp. 57-65
Author(s):  
Shamharir Abidin ◽  
Nurwati A. Ahmad-Zaluki ◽  
Desi Ilona
Keyword(s):  
Financial Performance ◽  
Significant Influence ◽  
Audit Committee ◽  
Stock Exchange ◽  
Independent Directors ◽  
Board Independence ◽  
Detailed Knowledge ◽  
Company Performance ◽  
Multiple Directorships ◽  
Financial Expertise

This paper provides an analysis on the effect of board quality on company performance. Using a sample of 133 companies listed on the Jakarta Stock Exchange in the year 2007, this study specifically examines whether multiple directorships, director shareholding and board independence (i.e. proxies for board quality) can be associated with company financial performance. This study also investigates the effect of audit committee characteristics (as proxied by audit committee independence and financial expertise) on company performance, while controlling for the effects of leverage and size. With regard to board quality, the results indicate that only board independence is found to be associated with performance, though in the opposite direction. The direction of influence suggests that having too many independent directors (i.e. non-executive) might slow down the business as they might have a lack of detailed knowledge about the company’s business, and are more concerned about their gatekeeper role. As expected, leverage and size are found to have a significant influence on company performance.

scholarly journals Corporate performance: does board independence matter? – Indian evidence

2018 ◽  
Vol 26 (1) ◽  
pp. 185-200 ◽  
Author(s):  
Arunima Haldar ◽  
Reeta Shah ◽  
S.V.D. Nageswara Rao ◽  
Peter Stokes ◽  
Dilek Demirbas ◽  
...  
Keyword(s):  
Financial Performance ◽  
Regression Models ◽  
Independent Directors ◽  
Board Independence ◽  
Content Type ◽  
Concentrated Ownership ◽  
Board Directors ◽  
The Cost ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine the effect of the presence of independent board directors on financial performance in India. Design/methodology/approach This study used panel regression models on large listed Indian firms to investigate the impact on financial performance owing to the presence of independent directors. Findings The findings suggest that independent board directors in Indian contexts do not significantly affect financial performance. Practical implications This study has implications for the formulation of regulation related to appointment of independent directors and the extent of their representation on the board for them to be effective. Social implications The proportion of independent directors on the board of the firm is influenced by the trade-off between the cost of having independent directors on the board versus the benefits to the firm and society. Originality/value The impact of the presence of an independent director on financial performance in highly concentrated ownership remains ambiguous.

scholarly journals Understanding the Impact of ESG Practices in Corporate Finance

2021 ◽  
Vol 13 (7) ◽  
pp. 3746
Author(s):  
Sang Kim ◽  
Zhichuan (Frank) Li
Keyword(s):  
Financial Performance ◽  
Financial Risk ◽  
Credit Rating ◽  
Social Factor ◽  
Positive Influence ◽  
Corporate Financial Performance ◽  
The Social ◽  
Negative Effect ◽  
The Impact ◽  
The Relationship

This study examines the relationship between environmental, social, and governance (ESG) factors and corporate financial performance. Specifically, we study various individual ESG categories, both ESG strengths and concerns, and aggregate ESG factor and their impact on corporate financial performance including profitability and financial risk. We find a positive effect of ESG factors on corporate profitability, and the effect is more pronounced for larger firms. Among different ESG categories, corporate governance has the most significant impact, particularly for firms with weak governance. We also find that ESG variables generally have a positive influence on credit rating. In particular, the social factor has the most significant impact on credit rating, while environmental score surprisingly has a negative effect. Overall, this research provides a rationale for ESG integration in the context of investment management and portfolio construction to maximize value and minimize risk.

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