Board Composition and Firm Performance: Empirical Evidence from JSE- listed Real Estate Firms

This study investigates the impact or relationship of board composition on the performance of JSE-listed real estate firms. The study explored Panel data analysis to estimate the impact of board composition elements on the performance of JSE-listed real estate firms in South Africa using sustainability data sourced from Bloomberg. The study considered board composition elements, board size, proportions on non-executive directors, independent directors and females on boards. Three main areas were explored: financial performance, market value, and sustainability. The return on assets and return on equity measured firm financial performance; firm value was measured by Tobin’s Q; and sustainability measured by the Bloomberg environmental and social sustainability scores. The findings indicate that female directors on board positively and significantly impact financial and sustainability performance but not firm value. Board size was found to negatively and significantly impact financial performance but positively and insignificantly impact firm value and sustainability. The proportion of non-executive directors did not significantly impact any of the performance metrics examined. The proportion of independent directors on boards negatively impacts financial performance and positively impacts sustainability. Companies should emphasise the qualifications, experience and skills female board members bring to boards. CEOs and other corporate executives should not directly participate in appointing non-executive and independent board members. This would ensure that they can better play the monitoring role required. Firms should also critically consider the number of board members required for effective decision-making and monitoring.