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The effect of board effectiveness on the long-term company success and comparability of financial information

Author

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  • Mahdi Salehi
  • Ali Hassanzadeh

Abstract

Purpose - This study aims to investigate the effect of the dynamics and potential of the board of directors on investment efficiency and the comparability of financial information in companies listed on the Tehran Stock Exchange. Design/methodology/approach - The number of observations for this study includes 1,218 observations from companies listed on the Tehran Stock Exchange during 2014–2020. The authors used econometric statistical methods such as multiple linear regression, the Chow and Hausman test and the Kendall correlation coefficient using Eviews software to conduct the research. To measure the board’s effectiveness, two variables are used, including board dynamics and potential. Findings - The results showed a positive and significant relationship between dynamics, board potential and investment efficiency. Also, no significant relationship was observed between the board dynamics and the comparability of financial information. Finally, a positive and significant relationship exists between the board’s potential and the comparability of financial information. Originality/value - The importance of this research is the use of board proxies, including the dynamics and potential of the board. In addition, other variables of board characteristics, such as size, independence, ownership and gender, and the relationship between these variables with investment efficiency and comparability of financial information, have been examined in this study.

Suggested Citation

  • Mahdi Salehi & Ali Hassanzadeh, 2024. "The effect of board effectiveness on the long-term company success and comparability of financial information," Management Research Review, Emerald Group Publishing Limited, vol. 47(7), pages 1005-1028, February.
    • Handle: RePEc:eme:mrrpps:mrr-11-2022-0829
    DOI: 10.1108/MRR-11-2022-0829
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