IDEAS home Printed from https://ideas.repec.org/a/rom/mancon/v15y2021i1p4-10.html
   My bibliography  Save this article

Comparative Analysis Between Two-Tier Boards And Unitary Boards In The Case Of The Companies Listed On The Bucharest Stock Exchange

Author

Listed:
  • Bogdan Aurelian MIHAIL
  • Dalina DUMITRESCU

Abstract

This paper examines the role of two-tier boards versus one-tier board systems for the case of firms listed on the Bucharest Stock Exchange (BSE). The literature shows that one-tier or unitary and two-tier or dualistic board systems have different advantages and disadvantages, like lower levels of information problems in unitary systems and higher levels of independence in the case of two-tier systems. The purpose of this paper is to collect information on various board and firm characteristics from around 60 companies with the unitary system and 6 companies with the dual system listed on BSE and analyses the differences that impact their financial performance. The results indicate that companies with a two-tier system are larger and have larger board sizes. In addition, they have better performance on average, measured by the return on equity indicator. However, the regression results indicate that these positive performance effects of the two-tier board become statistically insignificant when the various board and company characteristics are included as control variables. The low sample size of the two-tier board companies is a possible factor creating statistically insignificant results. The additional regressions results show that when the share of independent board members increases by 10%, the ROE increases by 1.26%.

Suggested Citation

  • Bogdan Aurelian MIHAIL & Dalina DUMITRESCU, 2021. "Comparative Analysis Between Two-Tier Boards And Unitary Boards In The Case Of The Companies Listed On The Bucharest Stock Exchange," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(1), pages 4-10, November.
    • Handle: RePEc:rom:mancon:v:15:y:2021:i:1:p:4-10
    DOI: 10.24818/IMC/2021/01.01
    as

    Download full text from publisher

    File URL: https://conferinta.management.ase.ro/archives/2021/pdf%20IMC%202021/1%20pdf%20S1%20IMC%202021/1_1.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.24818/IMC/2021/01.01?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:dau:papers:123456789/12816 is not listed on IDEAS
    2. Klein, April, 1998. "Firm Performance and Board Committee Structure," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 275-303, April.
    3. repec:zbw:bofrdp:2012_011 is not listed on IDEAS
    4. Yuan George Shan, 2019. "Managerial ownership, board independence and firm performance," Accounting Research Journal, Emerald Group Publishing Limited, vol. 32(2), pages 203-220, July.
    5. Belot, François & Ginglinger, Edith & Slovin, Myron B. & Sushka, Marie E., 2014. "Freedom of choice between unitary and two-tier boards: An empirical analysis," Journal of Financial Economics, Elsevier, vol. 112(3), pages 364-385.
    6. Caspar Rose, 2005. "The Composition of Semi‐Two‐Tier Corporate Boards and Firm Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(5), pages 691-701, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mukesh Nepal & Rajat Deb, 2022. "Board Characteristics and Firm Performance: Indian Textiles Sector Panorama," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 47(1), pages 74-96, February.
    2. Majid Jamal Khan & Faiza Saleem & Shahab Ud Din & Muhammad Yar Khan, 2024. "Nexus between boardroom independence and firm financial performance: evidence from South Asian emerging market," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    3. Aubert, Nicolas & Kern, Alexander & Hollandts, Xavier, 2017. "Employee stock ownership and the cost of capital11We are grateful to the Editor in Chief, Thomas Lagoarde-Segot and to participants at 2016 French accounting association conference, 2015 French financ," Research in International Business and Finance, Elsevier, vol. 41(C), pages 67-78.
    4. Le, Quyen & Vafaei, Alireza & Ahmed, Kamran & Kutubi, Shawgat, 2022. "Independent directors' reputation incentives and firm performance – an Australian perspective," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    5. Nicolas Aubert & Alexander Kern & Xavier Hollandts, 2017. "Employee stock ownership and the cost of capital," Post-Print halshs-01502001, HAL.
    6. Bremert, Michael & Schulten, Axel, 2008. "The impact of supervisory board characteristics on form performance," Papers 08-33, Sonderforschungsbreich 504.
    7. David Hillier & Patrick McColgan, 2008. "An analysis of majority owner‐managed companies in the UK," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(4), pages 603-623, December.
    8. Martin Kyere & Marcel Ausloos, 2021. "Corporate governance and firms financial performance in the United Kingdom," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1871-1885, April.
    9. Mohammad Ziaul Hoque & MD. Rabiul Islam & Mohammad Nurul Azam, 2013. "Board Committee Meetings and Firm Financial Performance: An Investigation of Australian Companies," International Review of Finance, International Review of Finance Ltd., vol. 13(4), pages 503-528, December.
    10. John Becker-Blease & Afshad Irani, 2008. "Do corporate governance attributes affect adverse selection costs? Evidence from seasoned equity offerings," Review of Quantitative Finance and Accounting, Springer, vol. 30(3), pages 281-296, April.
    11. Saha Rupjyoti & Kabra Kailash Chandra, 2019. "Does corporate governance influence firm performance? Evidence from India," Economics and Business Review, Sciendo, vol. 5(4), pages 70-89, December.
    12. Sofia Larmou & Nikos Vafeas, 2010. "The relation between board size and firm performance in firms with a history of poor operating performance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(1), pages 61-85, February.
    13. Callahan, William T. & Millar, James A. & Schulman, Craig, 2003. "An analysis of the effect of management participation in director selection on the long-term performance of the firm," Journal of Corporate Finance, Elsevier, vol. 9(2), pages 169-181, March.
    14. Mary Ellen Carter & Luann J. Lynch & Melissa A. Martin, 2022. "Board Committee Overlap and the Use of Earnings in CEO Compensation Contracts," Management Science, INFORMS, vol. 68(8), pages 6268-6297, August.
    15. Fich, Eliezer M. & White, Lawrence J., 2005. "Why do CEOs reciprocally sit on each other's boards?," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 175-195, March.
    16. Xie, Biao & Davidson, Wallace III & DaDalt, Peter J., 2003. "Earnings management and corporate governance: the role of the board and the audit committee," Journal of Corporate Finance, Elsevier, vol. 9(3), pages 295-316, June.
    17. Quôc Thai Huynh, 2010. "Les déterminants de l’activisme des actionnaires minoritaires:insuffisance de gouvernance affichée ou de résultats financiers?," Revue Finance Contrôle Stratégie, revues.org, vol. 13(3), pages 95-114., September.
    18. Xavier Hollandts & Nicolas Aubert, 2019. "La gouvernance salariale : contribution de la représentation des salariés à la gouvernance d’entreprise," Revue Finance Contrôle Stratégie, revues.org, vol. 22(1), pages 63-88, March.
    19. Olubunmi Faleye & Rani Hoitash & Udi Hoitash, 2018. "Industry expertise on corporate boards," Review of Quantitative Finance and Accounting, Springer, vol. 50(2), pages 441-479, February.
    20. Chen, Tao, 2015. "Institutions, board structure, and corporate performance: Evidence from Chinese firms," Journal of Corporate Finance, Elsevier, vol. 32(C), pages 217-237.

    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:rom:mancon:v:15:y:2021:i:1:p:4-10. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Ciocoiu Nadia Carmen (email available below). General contact details of provider: https://edirc.repec.org/data/mnasero.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.