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Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance

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  • Geoffrey C. Kiel
  • Gavin J. Nicholson

Abstract

In many respects, Australian boards more closely approach normative “best practice” guidelines for corporate governance than boards in other Western countries. Do Australian firms then demonstrate a board demographic‐organisational performance link that has not been found in other economies? We examine the relationships between board demographics and corporate performance in 348 of Australia's largest publicly listed companies and describe the attributes of these firms and their boards. We find that, after controlling for firm size, board size is positively correlated with firm value. We also find a positive relationship between the proportion of inside directors and the market‐based measure of firm performance. We discuss the implications of these findings and compare our findings to prevailing research in the US and the UK.

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  • Geoffrey C. Kiel & Gavin J. Nicholson, 2003. "Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 189-205, July.
    • Handle: RePEc:bla:corgov:v:11:y:2003:i:3:p:189-205
    DOI: 10.1111/1467-8683.00318
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    References listed on IDEAS

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    1. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 7-26.
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