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Examining Board Composition And Firm Performance

Author

Listed:
  • Hsiang-Tsai Chiang
  • Mei-Chih Lin

Abstract

This paper investigates the relationship between key factors of board composition and firm performance. We find that listed companies in Taiwan are suffered from the divergence between stock-control rights and earnings distribution rights, and the divergence of rights is negatively associated with firm performance, as predicted. Besides, consistent with the viewpoint of Agency Theory that the controlling interests of CEO may induce them to enhance company performance, we find that, CEO internalization is significantly positively associated with firm performance. In addition, the results of the influence of board structure document that, the more outside independent directors of a company, the better performance the company has. Our findings provide strong support for the notion that corporate ownership structure and board compositions are key factors in determining the corporate governance efficiency and play important roles in enhancing firm performance.

Suggested Citation

  • Hsiang-Tsai Chiang & Mei-Chih Lin, 2011. "Examining Board Composition And Firm Performance," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 5(3), pages 115-127.
    • Handle: RePEc:ibf:ijbfre:v:5:y:2011:i:3:p:15-27
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    Citations

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    Cited by:

    1. Kashif Rashid & Aqil Waqar Khan, 2014. "Board Size and Board Independence: A Quantitative Study on Banking Industry in Pakistan," Oeconomics of Knowledge, Saphira Publishing House, vol. 6(4), pages 2-17, December.
    2. Sugeng Suroso & Tri Widyastuti & M. Noor Salim & Irma Setyawati, 2017. "Intellectual Capital and Corporate Governance in Financial Performance Indonesia Islamic Banking," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 96-103.
    3. George Owusu-Antwi & Rachna Banerjee & Patrick Ofei, 2018. "Ownership Structure and Bank Performance: Empirical Evidence from the UAE," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(12), pages 1422-1438, December.
    4. Habib Abdulkarim & Abubakar Yusuf & Usman Isah, 2020. "Board Composition, Board Size and Market Value of Listed Industrial Goods Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(12), pages 14-19, December.

    More about this item

    Keywords

    Board leadership structure; CEO duality; Independent directors; firm performance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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