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In the boardroom spotlight: Examining the relationship between board size and profitability in Turkish family businesses with independent directors as key players

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  • Kamran Jannatli

Abstract

This paper investigates the intricate relationship between board composition, particularly the number of independent members, and the return on assets (ROA) in Turkish listed family businesses. Building upon existing literature on family firm management, this research introduces a nuanced analysis by incorporating measures of board size and the presence of independent members to better understand their impact on ROA. Through a focused investigation, it endeavors to unveil the moderating role of independent board members in shaping the relationship between board size and ROA within the specific context of family firms. Specifically, it examines how the number of independent members moderates the relationship between board size and ROA within the context of family firms. Leveraging a regression-based moderation analysis, the study draws on a dataset encompassing information from 55 listed family firms traded on the Istanbul Stock Exchange during the year 2022. The empirical findings reveal a significant moderating effect of the number of independent members on the relationship between board size and ROA. These results offer valuable insights for shareholders of family businesses, providing them with essential indicators concerning the importance of independent members within the board of directors. By shedding light on the role of independent members, this research contributes to enhancing corporate governance practices within family businesses. The findings underscore the importance of balanced board compositions and the inclusion of independent voices in decision-making processes, ultimately enhancing firm performance and shareholder value. Moreover, the study enriches the understanding of governance dynamics within the unique organizational context of family businesses.

Suggested Citation

  • Kamran Jannatli, 2024. "In the boardroom spotlight: Examining the relationship between board size and profitability in Turkish family businesses with independent directors as key players," Nowoczesne Systemy Zarządzania. Modern Management Systems, Military University of Technology, Faculty of Security, Logistics and Management, Institute of Organization and Management, issue 2, pages 13-28.
    • Handle: RePEc:aou:nszioz:y:2024:i:2:p:13-28
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    References listed on IDEAS

    as
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