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Do board characteristics drive firm performance? An international perspective

Abstract

The aim of our research is to analyze how board characteristics influence firm performance. In this paper, we specifically examine how board size, board independence, CEO duality, female directors and board compensation affect firm performance in a sample of international firms. The final panel data sample is composed of 10,314 firm-year observations belonging to 34 countries that have been grouped into six geographic zones: Africa, Asia, Europe, Latin America, North America and Oceania. Drawing on agency theory and dependence resource theory, we posit five hypotheses. The results show that some board characteristics, such as board size, board independence and having a female director, are positively associated with firm performance, whereas CEO duality, contrary to our expectations, also impacts positively on firm performance. Moreover, board compensation is not associated with firm performance. Tobin’s Q was used to measure firm performance, although an accounting measure was also employed for robustness analyses and to provide more validity to our results.

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Acknowledgements

The authors acknowledge financial support from the Spanish Ministry of Economy, Industry and Competitiveness for the Research Project ECO 2017-82259-R and from the University Jaume I, Spain, for the Research Project UJI-B2018-15.

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Correspondence to María Consuelo Pucheta-Martínez.

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Pucheta-Martínez, M.C., Gallego-Álvarez, I. Do board characteristics drive firm performance? An international perspective. Rev Manag Sci 14, 1251–1297 (2020). https://doi.org/10.1007/s11846-019-00330-x

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Keywords

  • Board size
  • Board independence
  • CEO duality
  • Female director
  • Board compensation
  • Corporate performance
  • International companies

JEL Classification

  • M14
  • G38