Governance & Administrative Expenses: Key Findings

Board Composition & Compensation enables grantmakers to benchmark their board composition against peers in the fi eld by board member age, gender, race/ethnicity, family membership, and other characteristics. The study also provides resources for benchmarking board compensation and expense practices

Board Composition, Political Connections and Performance in State-Owned Enterprises

This paper analyses the effects of board composition on the behaviour and performance of a sample of 114 Italian local public utilities, for which information about 1630 directors during 1994-2004 has been collected. This period is particularly interesting because of the legal changes that forced many firms to alter their juridical form and allowed the entrance of private investors. We investigate whether board size and/or board composition do affect decisions about employment and how they ultimately impact on performance. Our main findings indicate that politically connected directors, representing the state or the local municipality, dominate boards of directors in the Italian public utilities in the period under investigation. Politically connected directors exert a positive and significant effect on employment, while they impact negatively on performance.board size; board composition; politicians; local public utilities

Ownership Structure, Board Composition and Investment Performance

In this paper the relation between ownership structure, board composition and firm performance is explored. A panel of Swedish listed firms is used to investigate how board composition affects firm performance. Board heterogeneity is measured as board size, age and gender diversity. The results show that Swedish board of directors have become more diversified in terms of gender. Also, fewer firms have the CEO on the board which can be interpreted as a sign of increased independency. The regression analysis shows that gender diversity has a small but negative effect on investment performance, and the same holds for CEO being on the board. The analysis also show that board size has a significant negative effect on investment performance. When incorporating all the explanatory variables into one equation however, the negative effect of larger boards dilutes the effect of gender diversity and having the CEO on the board.Corporate governance; board composition; investments performance; marginal q

"Who Appoints Them, What Do they Do? Evidence on Outside Directors from Japan"

Reformists argue that Japanese firms maintain inefficiently few outside directors, while theory suggests market competition should drive firms toward their firm-specifically optimal board structure (if any). The debate suggests three testable hypotheses. First, perhaps board composition does not matter. If so, then firm performance will show no relation to board structure, but outsiders will be randomly distributed across firms. Second, perhaps boards matter, but many have suboptimal numbers of outsiders. If so, then firms with more outsiders should outperform those with fewer. Last, perhaps board matter, but market constraints drive firms toward their firm-specific optimum. If so, then firm characteristics will determine board structure, but firm performance will show no observable relation to that structure. To test these hypotheses, we assemble data on the 1000 largest exchange-listed Japanese firms from 1986-94. We first explore which firms tend to appoint outsiders to their boards, and find the appointments decidedly non-random: board composition matters. We then ask whether firms with more outside directors outperform those with fewer, and find that they do not: board composition is endogenous. As we find no robust evidence that board composition affects firm performance during either the thriving 1980s or the depressed early 1990s, we suspect that the optimal board structure may not depend on the macro-economic environment. We note that until recently courts effectively barred shareholder suits in Japan. We speculate that the much higher level of outside directors in the U.S. may have nothing to do with efficiency or monitoring. Instead, it probably reflects the way U.S. courts let firms use such directors to insulate the firm from extortionate but otherwise costly-to-defend self-dealing claims.

Commitment or Entrenchment?: Controlling Shareholders and Board Composition

This paper examines the determinants of board composition and firm valuation as a function of board composition in Taiwan - a country that features relatively weak protection for investors, firms with controlling shareholders, and pyramidal groups. The results suggest that there is poor governance when the board is dominated by members who are affiliated with the controlling family but good governance when the board is dominated by members who are not affiliated with the controlling family. In particular board affiliation is higher when negative entrenchment effects - measured by (1) divergence in control and cash flow rights, (2) family control, and (3) same CEO and Chairman - are strong and lower when positive incentive effects, measured by cash flow rights, are strong. Moreover, relative firm value is negatively related to board affiliation in family-controlled firms. Thus, the proportion of directors represented by a controlling family appears to be a reasonable proxy for the quality of corporate governance at the firm level when investor protection is relatively weak and it is difficult to determine the degree of separation between ownership and control.

PENGARUH ENVIRONMENTAL PERFORMANCE DAN KOMPOSISI DEWAN KOMISARIS TERHADAP ENVIRONMENTAL DISCLOSURE

Muhammad Ahada, 2014; The Influence of Environmental Performance and Board Composition on Environmental Disclosure. Advisors: : (I) Unggul Purwohedi SE, M.Si, Ph.D; (II) Yunika Murdayanti SE, M.Si, M.Ak. This study aims to examine the influence of Environmental Performance and Board Composition on Environmental Disclosure. This study used two independent variables and the dependent variable, Environmental Performance and Board Composition as independent variables, and Environmental Disclosure as the dependent variable. Environmental Performance is measured by using level of PROPER, Board Composition is calculated by proportion of independen commisioner, and Environmental Disclosure is measured by using environmental disclosure GRI G3 . This study using secondary data, by using PROPER report and the annual report and also sustainability report that including the environmental information. Samples of this study consist of 24 company who join in PROPER and listed in Bursa Efek Indonesia during the period of 2011-2013. The data obtained by purposive sampling technique and using regression analysis method. Result from the model shows that: 1) Environmental Performance have a significant influence to Environmental Disclosure; 2) Board Composition have no significant influence to Environmental Disclosure 3) Simultaneus test, show that Environmental Performance and Board Composition have a significant influence to Environmental Disclosure. Keywords: Environmental Performance, Board of Commisioners Composition, Environmental Disclosure

Board composition, process, and activism: evidence within American firms

This study provided an empirical test of the effects of compositional and process variables on board activism. The attributes examined were functional area knowledge, independence, duality, and effort norms. The findings from this study provided support for the positive relationships between both functional area knowledge and effort norms and board activism. The strong relationship between effort norms and activism indicates the importance of process variables in board research and the need for additional research using process variables in a board context giving further insight into board activism and governance. Additionally, the relationship between functional area knowledge and board activism highlights how boards ability to meet cognitive demands is critical in board performance. These results as well as future research directions are examined in the discussion.board activism, board governance, board attributes, strategic management.

Corporate board composition, protocols, and voting behavior: experimental evidence

We model experimentally the governance of an institution. The optimal management of this institution depends on the information possessed by insiders. However, insiders, whose interests are not aligned with the interests of the institution, may choose to use their information to further personal rather than institutional ends. Researchers (e.g., Palfrey 1990) and the business press have both argued that multiagent mechanisms, which inject trustworthy but uninformed “watchdog” agents into the governance process and impose penalties for conflicting recommendations, can implement institutionally preferred outcomes. Our laboratory experiments strongly support this conclusion. In the experimental treatments in which watchdog agents were included, the intuitionally preferred allocation was implemented in the vast majority of cases. Surprisingly, implementation occurred even in the absence of penalties for conflicting recommendations.Corporations - Finance ; Game theory

Board Composition and Corporate Performance: An Analysis of Evidence from Nigeria

This study examines the impact of board composition on the economic performance of firms in Nigeria. This study is significant because it attempts to analyze the relationship between corporate governance practices and financial performance in Nigeria thus providing a basis for a framework for institutional regulations. Board composition in this study is in terms of the proportion of the board of directors in Nigeria that is represented by outside non-executive directors. The hypothesis for the study is that there is no significant positive relationship between board composition and firm performance in Nigeria. The study uses a cross-sectional design, using a survey of a sample of 38 firms during the 2009 financial year. Results show that outside non-executive directors do not create any economic value added though may have some benefits. The results of the study are consistent with those of earlier studies for both developed and developing economies that there is no explicitly clear relationship between board composition and firm performance. Key words: Board composition, Corporate performance, Corporate governance, Non-executive directors

Three essays on board composition

Tesis por compendio de publicacionesThe thesis consists of three articles concerning the composition of board of directors in Italy. The first article analyzes the effects of board composition on the behaviour of a sample of 114 Italian local public utilities, for which information about 1630 directors during 1994–2004 has been collected. During this period, the deregulation process inspired institutional interventions that forced utilities, traditionally owned by local municipalities, to change their juridical form and ownership structure, thereby facilitating the entrance of private investors. The main findings indicate that politically connected directors, who dominate boards of directors in Italian public utilities, exert a positive and significant effect on employment, and have a negative impact on performance. The second article investigates the determinants of board compensation for the same sample of Italian local public utilities observed from 1994 through 2004. Average board pay is found to be positively related to firm dimension and negatively related to board size. The public or private nature of the major shareholder does not influence board compensation but the juridical form does. Finally, while the proportion of politically connected directors is found to negatively influence the level of per capita compensation, the impact of firm performance is uncertain. The third paper deals with diversity as a key factor to improve the board of directors’ decision process in family firms. The empirical literature about board diversity points at the positive impact of diversity on board functioning and firm performance. The empirical analysis is based on a newly collected panel of 327 Italian family firms including data on their board of directors during the period 2003-2007. We find that firm performance is positively related to a global, statistical measure of board diversity. In particular, the presence of gender diversity and a good mix of executive and non-executive managers show the strongest econometric significance, suggesting that diversity is an important factor to improve board decisions.Programa Oficial de Posgrado en Investigación en Economía de la Empresa y Métodos CuantitativosPresidente: Pablo de Andrés Alonso; Secretario: Marco Trombetta; Vocal: Josep Tribó Gin