IDEAS home Printed from https://ideas.repec.org/p/gro/rugsom/99e20.html
   My bibliography  Save this paper

Top management team and board attributes and firm performance in the Netherlands

Author

Listed:
  • Garretsen, Harry
  • Ees, Hans van
  • Postma, Theo

    (Groningen University)

Abstract

We survey the evidence on the relationship between board and top management team attributes and firm performance in the Netherlands (sample of 94 listed firms). To this aim we develop hypotheses by using sources from the strategic management and the corporate governance literature. Dutch corporations generally have a two-tier board system. We use the size of the top management team (TMT) and their average age as well as the size of the supervisory board (RVC) and the percentage of outside members as attributes of corporate performance. Our base model consists of two performance indicators: a composite financial accounting measure (of ROA, ROS, and ROE) and a market- based indicator (standardized stock prize increase). Control variables are: log of total assets as an indicator of the size of a firm, leverage and adjusted cash flow/total assets as indicators of financial structure, coefficients of variation of sales and ROA as measures of environmental uncertainty (dynamics), and diversification as a measure of risk-spread. In general, we conclude for the year 1996, that by using the base model, direct linear and non-linear relationships between the TMT/board variables and performance are not existent. Also, the interaction effects with environmental dynamics as a moderating variable are tested. From this analysis it becomes evident that, although environmental uncertainty has a clear direct relationship with performance, it has no significance as a moderating variable. Only in one case the interaction with size of the board leads to a significant result. Indicating (instead of the hypothesized inverted U-shaped relationship) a U-shaped relationship between RVC and performance.

Suggested Citation

  • Garretsen, Harry & Ees, Hans van & Postma, Theo, 1999. "Top management team and board attributes and firm performance in the Netherlands," Research Report 99E20, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    • Handle: RePEc:gro:rugsom:99e20
    as

    Download full text from publisher

    File URL: http://irs.ub.rug.nl/ppn/183841212
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chun I. Lee & Stuart Rosenstein & Nanda Rangan & Wallace N. Davidson III, 1992. "Board Composition and Shareholder Wealth: The Case of Management Buyouts," Financial Management, Financial Management Association, vol. 21(1), Spring.
    2. Michael A. Hitt & Beverly B. Tyler, 1991. "Strategic decision models: Integrating different perspectives," Strategic Management Journal, Wiley Blackwell, vol. 12(5), pages 327-351, July.
    3. David Norburn & Sue Birley, 1988. "The top management team and corporate performance," Strategic Management Journal, Wiley Blackwell, vol. 9(3), pages 225-237, May.
    4. Donald C. Hambrick & Richard A. D'Aveni, 1992. "Top Team Deterioration as Part of the Downward Spiral of Large Corporate Bankruptcies," Management Science, INFORMS, vol. 38(10), pages 1445-1466, October.
    5. Mayers, David & Shivdasani, Anil & Smith, Clifford W, Jr, 1997. "Board Composition and Corporate Control: Evidence from the Insurance Industry," The Journal of Business, University of Chicago Press, vol. 70(1), pages 33-62, January.
    6. Scott W. Barnhart & M. Wayne Marr & Stuart Rosenstein, 1994. "Firm performance and board composition: Some new evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 329-340, July/Augu.
    7. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    8. Rosenstein, Stuart & Wyatt, Jeffrey G., 1990. "Outside directors, board independence, and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 26(2), pages 175-191, August.
    9. Paula L. Rechner & Dan R. Dalton, 1991. "CEO duality and organizational performance: A longitudinal analysis," Strategic Management Journal, Wiley Blackwell, vol. 12(2), pages 155-160, February.
    10. Rosenstein, Stuart & Wyatt, Jeffrey G., 1997. "Inside directors, board effectiveness, and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 44(2), pages 229-250, May.
    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. repec:dgr:rugsom:99e20 is not listed on IDEAS
    2. M. Andrew Fields & Phyllis Y. Keys, 2003. "The Emergence of Corporate Governance from Wall St. to Main St.: Outside Directors, Board Diversity, Earnings Management, and Managerial Incentives to Bear Risk," The Financial Review, Eastern Finance Association, vol. 38(1), pages 1-24, February.
    3. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, January.
    4. Booth, James R. & Cornett, Marcia Millon & Tehranian, Hassan, 2002. "Boards of directors, ownership, and regulation," Journal of Banking & Finance, Elsevier, vol. 26(10), pages 1973-1996, October.
    5. G. Tyge Payne & George S. Benson & David L. Finegold, 2009. "Corporate Board Attributes, Team Effectiveness and Financial Performance," Journal of Management Studies, Wiley Blackwell, vol. 46(4), pages 704-731, June.
    6. Akshita Arora & Chandan Sharma, 2015. "Impact of Firm Performance on Board Characteristics: Empirical Evidence from India," IIM Kozhikode Society & Management Review, , vol. 4(1), pages 53-70, January.
    7. Mathieu, Robert & Robb, Sean & Zhang, Ping, 2006. "Leadership structure and the value of debt contracts: Evidence from the Canadian market," The International Journal of Accounting, Elsevier, vol. 41(2), pages 119-140.
    8. Ho, Carol-Anne & Williams, S. Mitchell, 2003. "International comparative analysis of the association between board structure and the efficiency of value added by a firm from its physical capital and intellectual capital resources," The International Journal of Accounting, Elsevier, vol. 38(4), pages 465-491.
    9. 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.
    10. Mueller, George C. & Barker III, Vincent L., 1997. "Upper Echelons and Board Characteristics of Turnaround and Nonturnaround Declining Firms," Journal of Business Research, Elsevier, vol. 39(2), pages 119-134, June.
    11. Panagiotis Staikouras & Christos Staikouras & Maria-Eleni Agoraki, 2007. "The effect of board size and composition on European bank performance," European Journal of Law and Economics, Springer, vol. 23(1), pages 1-27, February.
    12. Lee, Yung Sheng & Rosenstein, Stuart & Wyatt, Jeffrey G., 1999. "The value of financial outside directors on corporate boards," International Review of Economics & Finance, Elsevier, vol. 8(4), pages 421-431, November.
    13. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 7-26.
    14. Maug, Ernst, 1997. "Boards of directors and capital structure: Alternative forms of corporate restructuring," Journal of Corporate Finance, Elsevier, vol. 3(2), pages 113-139, April.
    15. Faleye, Olubunmi & Mehrotra, Vikas & Morck, Randall, 2006. "When Labor Has a Voice in Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 41(3), pages 489-510, September.
    16. Mak, Y. T. & Roush, M. L., 2000. "Factors Affecting the Characteristics of Boards of Directors: An Empirical Study of New Zealand Initial Public Offering Firms," Journal of Business Research, Elsevier, vol. 47(2), pages 147-159, February.
    17. Kevin Campbell & Antonio Minguez Vera, 2010. "Female board appointments and firm valuation: short and long-term effects," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(1), pages 37-59, February.
    18. Afzalur Rashid, 2015. "Revisiting Agency Theory: Evidence of Board Independence and Agency Cost from Bangladesh," Journal of Business Ethics, Springer, vol. 130(1), pages 181-198, August.
    19. Olfa Nessibi, 2016. "The Determinants of Bank Profitability: The Case of Tunisia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 5(1), pages 39-50, January.
    20. Kirchmaier, Thomas & Kollo, Michael G., 2006. "The role of prestige and networks in outside director appointment," LSE Research Online Documents on Economics 24635, London School of Economics and Political Science, LSE Library.
    21. Robert Campbell & Chinmoy Ghosh & Milena Petrova & C. Sirmans, 2011. "Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 42(4), pages 451-480, May.

    More about this item

    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:gro:rugsom:99e20. 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: Hanneke Tamling (email available below). General contact details of provider: https://edirc.repec.org/data/ferugnl.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.