The examinations of board chairman characteristics and board diversity: evidence from the UK listed firms

The UK governance codes have developed over the last few decades. This thesis predominantly discusses key aspects of those recommendations in relation to evidence of board effectiveness, firm performance, and firm outcomes. Chapter 3 discusses the effects of chairman characteristics on board effectiveness. By using a large CEO turnover dataset between 2005 and 2013, the title, independence, and age of the chairman play an important role in removing poor performing CEOs. This chapter also indicates that the impact of chairman characteristics may be dependent on board size and board independence. Chapter 4 examines the impact of female directors on firm performance. Previous studies indicate that there are mixed results in the relationship between female directors and firm performance. There is a tendency for the presence of females on the boards to encounter tokenism problems. Moreover, this chapter reports that the relationship between female directors and firm performance may depend on a certain characteristic such as firm size. Finally, Chapter 5 examines the effect of board diversity, particularly the diversity of non-executive directors, on firm survival. This chapter argues that by focusing only on non-executive directors and financially distressed firms, firm survival can be approached via the agency theory and the resource dependence theory. This chapter finds that the competency of non-executive directors, which is proxied by six diversity dimensions, tends to outperform the independence of non-executive directors in enhancing firm survival during the period of distress. Overall, this thesis contributes to governance studies in several ways. Firstly, it has opened the opportunity for further quantitative examinations on the chairman’s roles. Secondly, it contributes to a fast growing body of literature on board diversity. Thirdly, this thesis, particularly Chapter 5, contributes to studies on bankruptcy by linking corporate governance and financial distress via the agency theory and the resource dependence based theory

Diversity and performance: a case of board composition of firms on the Nigerian stock exchange

This thesis examines the relationship between crucial board characteristics and firm performance in certain industries in Nigeria. We examine the business case for the inclusion of women and ethnic minority directors on the board. Specifically, we investigate the relationship between the number of women directors and the number of ethnic minority directors (Yoruba, Igbo and Hausa) on the board, important board committees and financial performance measured as Return on Assets and Tobin’s Q. Unlike most studies on board which focus on developed markets, this study was conducted in an emerging market and the focus was on diversity using a pragmatic approach. Most study of this kind are pure empirical studies. To have a broader perspective on the subject we employed a mixed method approach. Employing a fixed effects model for our panel data and a semi-structured interview through a snowballing approach, we explore diversity and firm performance. Different theories such as resource dependence theory, agency theory, and stakeholder theory suggest that gender and ethnic diversity may have either a positive, negative, or no effect on the financial performance of the firm. Our statistical analysis supports the aforementioned effects. Our research results are consistent with what Carter et al. (2010) describe as a contingency explanation because the effect of the gender and ethnic diversity of the board may be different under different circumstances at different times. We found a positive and significant relationship between some ethnic groups and firm performance. However, we do not find a significant relationship between the gender, important board committees, or non-executive female board member and financial performance for a sample 190 firm on the Nigerian Stock Exchange. The results of our analysis do not support the business case for inclusion of women on corporate boards but it also does not deny it. This is linked to how we found that social networking, regionality, social acceptability, double shifting for women and minorities play important roles in determining the effectiveness of women and ethnic minorities on the Nigerian corporate board in our interviews, which may help to explain the limited numbers and the lack of impact of diversity on board performance in this developing country context. The developing country context also theoretically demanded a more integrated use of corporate governance thinking around agency, stewardship and resource dependence to help explain how governance operates in emerging economies like Nigeria

Corporate governance structures and financial performance: A comparative study of publicly listed companies in Singapore and Vietnam

This study uses a dynamic modelling approach to investigate the relationship between corporate governance structures and financial performance of publicly listed companies in Singapore and Vietnam. The dynamic modelling approach facilitates answering the first research question: whether the relationship between corporate governance structures and firm financial performance persists in the Singaporean and Vietnamese markets when the relationship’s dynamic nature is taken into account. Moreover, by focusing on two different types of national governance systems in the Asian region (well-developed vs. under-developed), this study observes how the relationship between corporate governance structures and firm performance is moderated by each country’s national governance quality. By carrying out this observation, this study answers the second research question: whether the corporate governance–firm performance relationship varies according to the quality of national governance systems in which firms operate. Two samples – including a total of 379 publicly listed non-financial companies covering a four-year period from 2008 to 2011– are examined through the use of a two-step system generalised method of moments estimator. This estimation technique allows for potential sources of endogeneity inherent in the corporate governance–firm performance relationship, including dynamic endogeneity, simultaneity, and unobserved time-invariant heterogeneity across firms. The results suggest that the performance effect of corporate governance structures persists in both markets even after the dynamic nature of the corporate governance–firm performance relationship is taken into consideration. For the Singaporean market, the results also show that the three corporate governance structures (board diversity, board size and ownership structures) appear to have statistically significant effects on firm performance. For both markets, it is observed that there is a statistically significantly positive relationship between ownership concentration and financial performance. This finding supports the prediction of agency theory regarding the efficient monitoring effect of large shareholders in markets with highly concentrated ownership. For the Vietnamese market, the results show that board gender diversity has a positive effect on firm performance. Remaining robust even after the alternative proxies for gender diversity are employed, this finding is consistent with the perspectives of agency theory and resource dependence theory. The number of female directors in the boardroom also matters, supporting the view that if female board representation affects firm outcomes, this effect is more pronounced when the number of female directors increases. However, the marginal positive performance effect of board gender diversity ceases when the percentage of female directors reaches a breakpoint of about 20%. This finding suggests that there is perhaps a potential trade-off between the costs and benefits of board gender diversity. Importantly, the results indicate that the relationship between the current performance and one-year lagged performance is statistically significantly positive in both markets, and robust when alternative estimation methods and models are employed. In line with Wintoki, Linck, and Netter (2012), among others, this finding suggests that the corporate governance–firm performance relationship should be investigated in a dynamic framework. This means that past firm performance should be considered as an important independent variable to control for potential effects of unobserved historical factors on current corporate governance structures and performance. Furthermore, the results show that better national governance quality has a positive effect on firm performance, and that the performance effect of ownership concentration is contingent upon national governance quality. The results suggest that ownership concentration appears to have a stronger positive effect on performance of companies in Vietnam where the national governance system is underdeveloped. In contrast, concentrated ownership tends to have a weaker effect on financial performance of firms in Singapore where the national governance system is well-established. This finding is consistent with the argument that ownership concentration is an efficient corporate governance mechanism which can substitute for weak national governance quality. In the absence of effective national governance mechanisms, ownership concentration is likely to be an important corporate governance strategy for Vietnamese firms to control potential agency problems. On the contrary, in Singapore, where national governance quality – such as legal protection of shareholders – is much better, the role of ownership concentration in determining performance seems to be weaker. This study is novel in that it is the first to explore the corporate governance–firm performance relationship using a dynamic modelling approach for the Vietnamese and Singaporean markets. The findings of this study significantly contribute toward a better understanding of international diversity on corporate governance by providing robust empirical evidence from the emerging and mature markets in the Asian region. This study also extends the corporate governance literature by enriching the understanding of the interaction between corporate-level and national-level governance mechanisms

Relevance of corporate boards in driving performance in the period that covers financial crisis

Purpose: This paper aims to examine the relevance of boards in driving firm level performance. For this purpose, it considers firms listed on Ireland and Spain stock exchanges for the period 2005 to 2014, over a period that includes the global financial crisis. Design/methodology/approach: This study uses panel data regression analysis to analyse the effects of board characteristics on performance and also uses alternate model specifications to test the significance of robustness of relationships. Findings: The impact of board size on performance is negative and significant for Irish and Spanish firms for the study period. In general, the board independence has a positive effect on the performance of Spanish firms for the complete study period and suggests consistency with the resource dependency theory. Research limitations/implications: The analysis suggests that in general, the non-executive and the board size do not affect the corporate performance of Irish and Spanish firms during the financial crisis. The fixed effects model suggests positive effects of gender diversity on performance for Spanish firms, while the random effects indicates negative relationship between gender diversity and performance for Irish companies. Practical implications: The evidence on the Spanish firms suggests that female representation on the boards may be critical during the financial crisis Social implications: The quota legislation on female board representation in Spain is yielding superior results over the soft law approach by Irish firms during the times of financial crisis period. Originality/value: This study contributes to the literature on the corporate governance practices and performance of two countries that were strongly affected by the crisis in the European Union. As governments increasingly contemplate board gender diversity policies, this study offers useful empirical insights on Spanish and Irish firms.Peer ReviewedPostprint (author's final draft

The Impact of Board Characteristics on Firm Performance of the Information Technology Sector: Evidence from China

Board of directors of the Chinese companies differs from the others, playing an essential role in firm management. However, literature on the effect of the particular board structure of listed Chinese companies on firm results following the reform of corporate governance regulations is relatively limited. It is still uncertain to verify whether certain board characteristics affect business performance and to what extent to influence it after reforming corporate governance regulations. So this study has the goal of determining any relation between board attributes and overall results. This study chooses Chinese quoted firms of the information technology industry as the sample to examine how the gender diversity of board, board independence, CEO duality, and board meetings frequency influence firm performance. The final panel data sample comprises of 792 company-year observations from 132 public firms of the information technology sector from 2012 to 2017. Besides, this study has come up with four hypotheses related to the above board variables in the light of three theories: agency theory, resource dependence theory, and stewardship theory. ROA is used for measuring financial performance and robustness test is carried out by using alternative measurement ROE. By performing regression of fixed effect models, this study concluded that board gender diversity and CEO duality have a considerably positive connection with firm performance, whereas board independence, contrary to the prediction, negatively affects company performance. Also, the number of annual board meetings is not linked with organization performance. Finally, these results are generally robust although CEO duality is no longer remarkable for the relation to ROE

Examining the Link Between Diversity and Firm Performance: The Effects of Diversity Reputation and Leader Racial Diversity

Given the scarcity of empirical research on the impact of diversity on organizational performance, we used longitudinal data for 100 firms to test hypotheses related to the effects of diversity reputation and leader racial diversity on firm financial outcomes. The results showed a positive relationship between diversity reputation and book-to-market equity, and a curvilinear U-shaped relationship between leader diversity and revenues, net income and book-to-market equity. Our analyses suggest that economic benefits generated from diversity reputation may primarily derive from capital rather than product markets. Further, firm performance declines with increases in the representation of racial minorities in leadership up to a point, beyond which further increases in diversity are associated with increases in performance

How New Venture Initial Public Offerings Benefit from International Operations: A Study of Human Resource Value

When internationalization goes beyond simply having international sales to having international operations, organizations can benefit from diversity of ideas and knowledge. Our study focuses on a special class of companies called new venture firms. As younger organizations, they may be well equipped to embrace the unique benefits of international diversity. However, new ventures may not be equal in this regard; therefore, our study also explores the moderating effect of human resource value for these firms

Does Board Gender Diversity Influence Financial Performance? Evidence from Spain

In recent years, several countries have enacted guidelines and/or mandatory laws to increase the presence of women on the boards of companies. Through these regulatory interventions, the aim is to eradicate the social and labor grievances that women have traditionally experienced and which has relegated them to smaller-scale jobs. Nevertheless, and despite the advances achieved, the female representation in the boardroom remains far from the desired levels. In this context, it is now necessary to enhance the advantages of board gender diversity from both ethical and economic points of view. This article examines the relation between board gender diversity and economic results in Spain: the second country in the world to legally require gender quotas in boardrooms and historically characterized by a minimal female participation in the workforce. Based on a sample of 125 non-financial firms listed on the Madrid Stock Exchange from 2005 to 2009, our findings show that in the period analyzed the increase of the number of women on boards was over 98 %. This suggests that compulsory legislation offers an efficient framework to execute the recommendation of Spanish codes of good governance by means of the increase in the number of women in the boards of firms. Furthermore, we find that the increase in the number of women on the boards is positively related to higher economic results. Therefore, both results suggest that gender diversity in boardrooms should be incremented, mandatory laws being a key factor to do so

Board structure, ownership structure and firm performance: A study of New Zealand listed-firms

This paper investigates the role of board structure and the effect of ownership structures on firm performance in New Zealand's listed firms. Several studies, the majority from the U.S., U.K. and Japan, have examined the relationship between corporate governance mechanisms, ownership structure and firm performance. Those studies yielded different results, affected by the nature of the prevailing governance system for each country. Investigating New Zealand's listed firms could enhance the diversity of the growing body of work that examines this relationship. Though the majority of studies only tested a linear relationship between variables, a number of studies have found a non-linear relationship between board structures, ownership structures and firm performance, and this study confirms the non-linear relationship. Using a balanced panel of 79 New Zealand listed firms, this study employs a Generalised Linear Model (GLM) for robustness. The result reveals that board of directors, board committees, and managerial ownership have a positive and significant impact on firm performance. Meanwhile, nonexecutive directors, female directors on the board and blockholder ownership lower New Zealand firm performance

Gendering dynamic capabilities in micro firms

Gender issues are well-researched in the general management literature, particular in studies on new ventures. Unfortunately, gender issues have been largely ignored in the dynamic capabilities literature. We address this gap by analyzing the effects of gender diversity on dynamic capabilities among micro firms. We consider the gender of managers and personnel in 124 Ukrainian tourism micro firms. We examine how a manager’s gender affects the firm’s sensing capacities and investigate how it moderates team gender diversity’s impact on sensing capacities. We also investigate how personnel composition impacts seizing and reconfiguration capacities. We find that female managers have several shortcomings concerning a firm’s sensing capacity but that personnel gender diversity increases this capacity. Team gender diversity has positive effects on a firm’s seizing and reconfiguration abilities. Our study advances research on gender diversity and its impact on firm capabilities and illustrates its relevance for staffing practices in micro firms