Board characteristics and financial performance: A comprehensive literature review

Abstract

This paper reviews literature on corporate governance and firm performance published from 1998 to 2019 in a comprehensive manner. The board characteristics such as board size, meetings, composition, and CEO duality are the main discussion points. The findings show that most of the studies have used panel data and statistical tools such as random effects, multiple regression analysis, or instrumental variables approach, etc. The citation analysis revealed that the most cited studies are Eisenberg, Sundgren, and Wells (1998) and Jackling and Johl (2009) in international and Indian contexts respectively. This compilation of past studies will stimulate scholars to identify the research gap in this area and pursue further research

Board Leadership Structure and Firm Performance: Moderating Effects of Board Independence

“…A higher frequency of board meetings may result in a more fruitful exchange of ideas since BM has a positive impact on ROE and TQ, in line with Vafeas (1999). The board independence, BI, has a negative relationship with firm performance measures, which may be due to the need for independent decision-making powers with independent directors (see Arora & Singh, 2021). Further, when a firm has a gender-diverse board, it boosts operating and market performance as well.…”

“…In the context of corporate governance, the dual leadership structure is one of the most well-known and contentious issues (Arora & Singh, 2021; Balinga et al, 1996; Brickley et al, 1994; Finkelstein & D’Aveni, 1994; Pi & Timme, 1993; Yu, 2022). It is the circumstance in which the same person serves as both chairman and managing director (MD)/chief executive officer (CEO).…”

Relationship between the board of directors and financial performance: Empirical Anecdote

“…This section reviews the literature for the board variables such as size of the board, independence of board, dual role of CEO, number of board meetings, promoter's shareholding. Numerous meta-analyses and review articles, (Arora and Singh, 2021), have addressed the linkages among governance variables and performance of the firm. The past studies have been discussed further which are related to these variables.…”