IDEAS home Printed from https://ideas.repec.org/a/mfj/journl/v20y2016i3p181-236.html
   My bibliography  Save this article

Corporate Governance, Board Composition, Director Expertise, and Value: The Case of Quality Excellence

Author

Listed:
  • Andreas Charitou

    (University of Cyprus, Cyprus)

  • Ifigenia Georgiou

    (Aston Business School, UK & Cyprus International Institute of Management, Cyprus)

  • Andreas Soteriou

    (University of Cyprus, Cyprus)

Abstract

In this paper, we highlight the strategic role of the board of directors (BOD) in business excellence and its link with firm value. We empirically investigate the relationship between the composition of the BOD and the winning of a Malcolm Baldrige National Quality Award (MBNQA) or a local award explicitly based on the MBNQA criteria, a proxy for business excellence. Using a contingency approach, we examine several characteristics of the BOD, such as the number of inside directors, the number of directors who can be considered industry experts, and the number of directors with management expertise. We show that the likelihood of winning a quality award is positively associated with the number of outside directors with Ph.D. in the main object of business operations, and the number of outside directors with recent industry expertise. Subsequent residual analysis reveals that firm value is positively associated with the degree of the fit between board composition and quality management strategy. Specifically, operating income before depreciation, operating margin, Tobin’s Q, and ten-day raw and market adjusted returns, are positively related to the degree of fit, while cost per dollar of sales, negatively. Thus, we, conclude that an appropriate board structure that fits the QM strategy exists, and this fit is positively associated with firm value.

Suggested Citation

  • Andreas Charitou & Ifigenia Georgiou & Andreas Soteriou, 2016. "Corporate Governance, Board Composition, Director Expertise, and Value: The Case of Quality Excellence," Multinational Finance Journal, Multinational Finance Journal, vol. 20(3), pages 181-236, September.
    • Handle: RePEc:mfj:journl:v:20:y:2016:i:3:p:181-236
    as

    Download full text from publisher

    File URL: http://www.mfsociety.org/modules/modDashboard/uploadFiles/journals/MJ~0~p1b9j1an321t1tvv21sess08k1d4.pdf
    Download Restriction: no
    File URL: http://www.mfsociety.org/modules/modDashboard/uploadFiles/journals/googleScholar/1198.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christina Vadasi & Michalis Bekiaris & Andreas Andrikopoulos, 2021. "Internal Audit Function Quality and Corporate Governance: The Case of Greece," Multinational Finance Journal, Multinational Finance Journal, vol. 25(1-2), pages 1-61, March - J.
    2. Alex Johanes Simamora, 2020. "ASEAN Corporate Governance Scorecard and Firm Value," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 66-80.

    More about this item

    Keywords

    board of directors; corporate governance; director expertise; strategic role of the board quality management; quality awards;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mfj:journl:v:20:y:2016:i:3:p:181-236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Theodossiou Panayiotis (email available below). General contact details of provider: https://edirc.repec.org/data/mfsssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.