scholarly journals Board Composition, Board Activity and Ownership Concentration, the Impact on Firm Performance

2014 ◽  
Author(s):  
Shiguang Ma ◽  
Gary Gang Tian
Keyword(s):  
Firm Performance ◽  
Ownership Concentration ◽  
Board Composition ◽  
The Impact

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 The structure of corporate ownership and firm performance: Sri Lankan evidence

2013 ◽  
Vol 11 (1) ◽  
pp. 723-734 ◽  
Author(s):  
Athula Manawaduge ◽  
Anura De Zoysa
Keyword(s):  
Firm Performance ◽  
Performance Measures ◽  
Ownership Structure ◽  
Emerging Market ◽  
Ownership Concentration ◽  
Sri Lankan ◽  
Accounting Performance ◽  
Listed Firms ◽  
Strong Positive Relationship ◽  
The Impact

This paper examines the impact of ownership structure and concentration on firm performance in Sri Lanka, an emerging market in Asia. The study estimates a series of regressions using pooled data for a sample of Sri Lankan-listed firms to investigate the impact of ownership concentration and structure on firm performance based on agency theory framework, using both accounting and market-based performance indicators. The results of the study provide evidence for a strong positive relationship between ownership concentration and accounting performance measures. This suggests that a greater concentration of ownership leads to better performance. However, we found no significant impact using market-based performance measures, which suggests the existence of numerous market inefficiencies and anomalies. Furthermore, the findings of the study show that ownership structure does not have a significant distinguishable effect on performance.

scholarly journals Corporate governance and firm performance within the Russian agri-food sector: does ownership structure matter?

2020 ◽  
pp. 1-20
Author(s):  
Alisher Tleubayev ◽  
Ihtiyor Bobojonov ◽  
Taras Gagalyuk ◽  
Emma García Meca ◽  
Thomas Glauben
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Food System ◽  
Vital Role ◽  
Ownership Concentration ◽  
Food Sector ◽  
Return On Assets ◽  
Peak Point ◽  
Return On Sales ◽  
The Impact

This article provides pioneering empirical evidence on the ownership structure and firm performance relationship for the case of corporate agri-food companies in Russia. While Russia plays a vital role in the global agri-food system, its domestic agri-food production is evidently dominated by a small number of corporate enterprises, which are in turn characterized by high ownership concentration. We employ unique panel data obtained from 203 companies for the years between 2012 and 2017. A random effects model was used to analyze the impacts of ownership concentration and ownership identity on the firms’ financial performance, measured by return on assets and return on sales. Our results indicate an inverse U-shaped association between ownership concentration and firm performance, with average level of ownership concentration found to be on the descending range of the inverse U-shaped curve. Moreover, we observe a similar quadratic relationship between ownership concentration by government and directors and firm performance. On average, ownership by directors was found to be on the ascending range and below the peak point, suggesting a potential for further performance improvement, while the impact of agroholding ownership was found to be linear and positive.

The impact of board composition on firm performance in the restaurant industry

2017 ◽  
Vol 29 (8) ◽  
pp. 2121-2138 ◽  
Author(s):  
Sujin Song ◽  
Hubert B. Van Hoof ◽  
Sungbeen Park
Keyword(s):  
Firm Performance ◽  
Restaurant Industry ◽  
Operational Performance ◽  
Board Members ◽  
Board Composition ◽  
Stewardship Theory ◽  
Outside Directors ◽  
Content Type ◽  
Restaurant Firms ◽  
The Impact

Purpose This study aimed to investigate the impact of the board composition on financial performance in the restaurant industry from a stewardship theory perspective. Design/methodology/approach The composition of board was measured as the ratio of inside and outside directors. Firm performance was operationalized as return on assets (operational performance) and Tobin’s q (market-based performance). Panel regression analysis tested the research hypotheses. Findings Using data from 25 restaurant firms from 2007 to 2013, the study found an insignificant impact of board composition on operational performance. However, a higher proportion of inside board members increases market-based performance. A higher proportion of outside board members decreases market-based performance. Practical implications Supporting the basic tenets of stewardship theory, restaurant companies may consider changing the current practice of having a super-majority of outside directors and increase the inside board members. Because inside board member have greater experience with the organization and the industry, they have a better understanding of the status quo and are better able to respond to opportunities and threats in the environment. Originality/value Considering the scarcity of research on how the board composition affects firm performance in the hospitality context, the present study is a forerunner in its exploration of the impact of inside and outside directors on restaurant firms’ performance.

scholarly journals The Association of Board Composition, Intellectual Capital and Firm Performance in a High Ownership Concentration Context: Evidence from Italy

2016 ◽  
Vol 11 (10) ◽  
pp. 317 ◽  
Author(s):  
Stefania Veltri ◽  
Romilda Mazzotta
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Ownership Structure ◽  
Capital Market ◽  
Ownership Concentration ◽  
Board Composition ◽  
Firm Efficiency ◽  
Management Literature ◽  
Sophisticated Model ◽  
The Relationship

<p>The association of Corporate Governance (CG) with Firm Performance (FP) has always been an issue relevant to management literature. Nevertheless, the notable heterogeneity of studies and their mixed results highlight the opportuneness of continuing to investigate the association of CG with FP. The article aims to contribute to this research by building and employing a sophisticated model to take into account beyond the  board composition ownership structure and firm efficiency in using its intellectual capital (as measured by VAIC<sup>TM</sup>). The findings provide evidence that the board composition, the ownership concentration and the efficiency of intellectual capital increases firm efficiency in producing profits (as measured by ROA). Furthermore, our findings add knowledge to the relationship between CG and FP, by confirming a positive relationship in Italy, a continental European capital market under-investigated on this issue.</p>

scholarly journals Influence of Board Size and Independence on Firm Performance: A Study of Indian Companies

2007 ◽  
Vol 32 (3) ◽  
pp. 39-60 ◽  
Author(s):  
Ajay Kumars Garg
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Good Deal ◽  
Independent Directors ◽  
Board Composition ◽  
Board Independence ◽  
Inverse Association ◽  
Board Size ◽  
Minimum Number ◽  
The Impact

Corporate governance issues have attracted a good deal of public interest because of their apparent importance for the economic health of corporations and society in general, especially after the plethora of corporate scams and debacles in recent times. Corporate governance issues flow from the concept of accountability and governance and assume greater significance and magnitude in the case of corporate form of organization where the ownership and management of organizations are distanced. And, it is in this context that the pivotal role played by the board of directors in maintaining an effective organization assumes much importance. A major part of the debate on corporate governance centres around board composition especially board size and independence. Various committees have mandated a minimum number of independent directors and have given guidelines on board composition. However, the relationship of board characteristics such as composition, size, and independence with performance has not yet been established. This paper addresses this question: Does the board size and independence really matter in terms of influencing firm's performance? The findings suggest that: There is an inverse association between board size and firm performance. Different proportions of board independence have dissimilar impact on firm performance. The impact of board independence on firm performance is more when the board independence is between 50 and 60 per cent. Smaller boards are more efficient than the larger ones, the board size limit of six suggested as the ideal. Independent directors have so far failed to perform their monitoring role effectively and improve the performance of the firm. The guidelines on corporate governance should take into account the ‘cross-board’ phenomenon while defining the criteria for eligibility for appointment as an independent director. Lack of training to function as independent directors and ignorance of the procedures, tasks, and responsibilities expected of them could be reasons for the independent directors' non-performance. A bad performance leads to an increase in board size, which in turn, hampers performance. Guidelines are provided for future studies to include different variables to see which board composition is suitable for different companies at different stages of life cycle.

scholarly journals Board structure, ownership concentration and corporate performance: Italian evidence

2017 ◽  
Vol 15 ◽  
pp. 347-359 ◽  
Author(s):  
Vincenzo Scafarto ◽  
Federica Ricci ◽  
Gaetano Della Corte ◽  
Pasquale De Luca
Keyword(s):  
Firm Performance ◽  
Negative Impact ◽  
Ownership Concentration ◽  
Substitution Effects ◽  
Board Independence ◽  
Governance Mechanisms ◽  
Board Size ◽  
Full Independence ◽  
Board Level ◽  
The Impact

This paper investigates the interplay between board-level governance characteristics, ownership concentration and firm performance in the Italian corporate landscape, which is characterized by high (though varying) degrees of ownership concentration. The empirical setting of this study is the Italian stock market and specifically a sample of non-financial firms included in FTSE MIB and mid-cap index of Milan stock exchange, spanning a five-year time period from 2011 up to 2015. We regressed an accounting proxy for firm performance, namely the return-on-asset (ROA) ratio, on several board-level governance variables and specifically board size, board independence, CEO-chairman duality and audit committee (ACD) full independence. In doing so, we also controlled for the impact of different levels of ownership concentration by partitioning the sample into firms with lower and-higher-than-median values of ownership concentration (OC). The empirical results indicate that board characteristics differently impact performance in firms with lower levels of OC compared to firms with higher OC. Specifically, in lower-OC firms, board independence and AC full independence have a negative impact, whereas CEO duality (either alone or interacted with board independence) has a positive impact on performance. Conversely, higher-OC firms benefit from a large board size and are negatively affected by AC independence, while the remaining variables are not significant. The key insight to be gained from our evidence is that the individual and interaction effects of board-level mechanisms may be contingent on the presence of other governance mechanisms (in this instance, the degree of ownership concentration). As such, this research adds to the existing literature questioning the ‘one-size-fits-all’ approach to corporate boards. In terms of practical implications, our findings support the notion that firms might consider the potential interaction and substitution effects between governance mechanisms and structure boards accordingly.

scholarly journals The governance role of shareholders and board of directors on firm performance: an eclectic governance-performance model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ozgur Ozdemir ◽  
Erhan Kilincarslan
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Board Of Directors ◽  
Positive Impact ◽  
Ownership Concentration ◽  
Data Set ◽  
Resource Based View ◽  
Content Type ◽  
The Impact

Purpose This study aims to examine the governance role of shareholders and board of directors in determining firm performance through an eclectic multi-theoretic model that integrates structure and incentive functions of agency theory and capability aspect of the resource-based view. Design/methodology/approach The research model uses a large panel data set of 2,364 UK firms over the period 2000–2010 and uses alternative specifications of the model to improve robustness. Findings The results show that the industry experience of major shareholders as a proxy for shareholder capability has a significant positive impact on investee firm performance. The findings also reveal that the lock-in effect of the largest shareholder has a positive impact on performance, whereas the monitoring effectiveness of shareholders is not associated with ownership concentration. Moreover, the results indicate the underlying capabilities of the board of directors and their impact on corporate performance – particularly, the interlocking directorates of executives have a positive impact on firm performance but those of non-executives have a negative one. However, the previous directorship experience of non-executives has a positive impact on performance. Research limitations/implications This study presents a more comprehensive and complete understanding of the governance-performance relationship beyond the narrow or partial explanations provided by single-theory-based studies or those of investigating the effect of various governance tools separately. Practical implications This study provides more insights into the capability dimension of shareholders and the role of incentives in motivating shareholders to exercise stronger oversight on the management rather than just using ownership concentration. Hence, the study can serve as valuable guidance for investors, corporate managers and policymakers. Originality/value To the best of the knowledge, this is the first comprehensive study that uses an eclectic philosophical approach, integrating the agency theory and resource-based view, to not only examine the impact of board of directors but also investigate the governance role of shareholders in modern corporations to understand how shareholders acquire the requisite skills and information, the best practices and processes, and ultimately use the scarce and inimitable resources that help investee firms in improving their performance.

scholarly journals The impact of corporate governance measures on firm performance: the influences of managerial overconfidence

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Tolossa Fufa Guluma
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Market Competition ◽  
Debt Financing ◽  
Ownership Concentration ◽  
Managerial Behavior ◽  
Managerial Overconfidence ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

AbstractThe paper aims to investigate the impact of corporate governance (CG) measures on firm performance and the role of managerial behavior on the relationship of corporate governance mechanisms and firm performance using a Chinese listed firm. This study used CG mechanisms measures internal and external corporate governance, which is represented by independent board, dual board leadership, ownership concentration as measure of internal CG and debt financing and product market competition as an external CG measures. Managerial overconfidence was measured by the corporate earnings forecasts. Firm performance is measured by ROA and TQ. To address the study objective, the researcher used panel data of 11,634 samples of Chinese listed firms from 2010 to 2018. To analyze the proposed hypotheses, the study employed system Generalized Method of Moments estimation model. The study findings showed that ownership concentration and product market competition have a positive significant relationship with firm performance measured by ROA and TQ. Dual leadership has negative relationship with TQ, and debt financing also has a negative significant association’s with both measures of firm performance ROA and TQ. Moreover, the empirical results also showed managerial overconfidence negatively influences the relationship of board independence, dual leadership, and ownership concentration with firm performance. However, managerial overconfidence positively moderates the impact of debt financing on firm performance measured by Tobin’s Q and negative influence on debt financing and operational firm performance relationship. These findings have several contributions: first, the study extends the literature on the relationship between CG and a firm’s performance by using the Chinese CG structure. Second, this study provides evidence that how managerial behavioral bias interacts with CG mechanisms to affect firm performance, which has not been studied in previous literature. Therefore, the results of this study contribute to the theoretical perspective by providing an insight into the influencing role of managerial behavior in the relationship between CG practices and firm performance in an emerging markets economy. Hence, the empirical result of the study provides important managerial implications for the practice and is important for policy-makers seeking to improve corporate governance in the emerging market economy.

scholarly journals The effect of board composition and managerial pay on Saudi firm performance

2021 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Positive Relationship ◽  
Board Composition ◽  
Board Independence ◽  
Policy Makers ◽  
Listed Firms ◽  
The Impact ◽  
Managerial Pay ◽  
Governance Arrangements

AbstractUsing five empirical methodologies to account for endogeneity issues, this study investigates the effects of board independence and managerial pay on the performance of 169 Saudi listed firms between 2007 and the end of 2014. Studying board independence and managerial pay utilises the main internal governance mechanism in relation to firm performance; therefore, the effect of the 2009 exogenous regulatory shock on board independence was also examined to learn whether it impacted firm performance. The empirical results show that the board composition–performance relationship is endogenous. Strong evidence is found through the dynamic generalised method of moments estimation, which indicates that board composition has a positive relationship with return on assets, and poor past performance of listed firms has a negative impact on the current level of performance. The difference-in-differences approach results show a positive relationship between board composition, stock returns, and Tobin’s Q. The findings also reveal that managerial pay has a positive relationship with firm performance, although when endogeneity is considered, there is a smaller positive relationship and a decrease in significance levels. Thus, pay-for-performance in Saudi Arabia matters, and firms are not simply controlled by the government. The results of this study have implications for both policy makers and investors. In particular, policy makers and Saudi regulators can evaluate the impact of Saudi corporate governance arrangements and, in so doing, highlight changes in corporate governance arrangements that need to be made to achieve their economic objectives, such as Vision 2030. This study also contributes to the literature by showing the importance of considering endogeneity in studies.

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