The Influence of the Independent Non-Executive Board Members on the Financial Performance of the Companies Listed in the Bucharest Stock Exchange

Abstract

This paper studies the impact of independent board members on the financial performance of companies listed on the Bucharest Stock Exchange during the period 2016–2020. Different characteristics of the board of directors have been examined extensively in the literature and board independence was identified as one of the most effective corporate governance tools. In this context, the present study contributes to the relevant literature by examining recent data for Romania and investigating alternative performance indicators such as return on assets (ROA), return on equity (ROE) and Tobin’s Q. The correlation analysis, scatter plots, and regression results document that a higher share of the independent board members was associated with higher returns on equity ratio. Specifically, a 10% rise in the share of independent members was associated with an approximately 0.9%-point increase in ROE.

The Complexity of Interaction between Executive Board Gender Diversity and Financial Performance: A Panel Analysis Approach Based on Random Effects

“…However, the results are not robust enough; in some works, they are even contradictory. Hence, among recent studies examining the influence of nonexecutive board members on the financial performance of Romanian companies listed on the BSE is Mihail and Micu's work [64], which analyzes the importance of directors' independence in corporate governance and shows that the higher share of independent board members is associated with a higher ROE indicator yield. Along with similar studies [23,[64][65][66][67] conducted on Romanian companies listed on BSE, our study is distinguished by (i) a more generous period covered by the analysis, 2011-2019, and the fragmented period before and after the transition to the international IFRS financial reporting framework; (ii) examining the link between the gender diversity of board executive managers and financial performance, the former expressed by 4 indicators (3 of profitability and one of liquidity), and also measured through a composite performance index; and (iii) measuring the average degree of disclosure of nonfinancial information about managers traits using scorecard variables.…”

“…is study conducted an empirical cross-sectional and time-series data analysis on BSE listed companies with the purpose to analyze the impact of the size and executives' board gender diversity on the financial performance of companies. Likewise, according to Vintila et al [66], Achim et al [23], Borlea et al [67], Mihail and Micu [64], and Pintea et al [68] this study focused on the influence of the board of executive directors in the context of a slow but sustained evolution of Romanian corporate governance regulations and practices. e most significant theories (agency theory, resource dependence theory, and upper echelon theory) that underpin the relationship between the composition and diversity of boards and business performance have shown that greater gender diversity among CEOs can influence performance measurement indicators.…”

Do foreign banks disclose corporate social responsibility practices more than their local counterparts? Empirical evidence of an emerging market context

“…In creating sustainable competitive advantage, board of directors plays a significant role in bringing valuable and inimitable resources to the firms (Bhatt & Bhattacharya, 2015). One of the effective ways to tap into strategic resources is by having more outside or independent directors on the board (Mihail & Micu, 2021). It is more critical in an emerging market setting where tangible and intangible resources are deficient and in‐firm knowledge in most cases is limited or non‐existence.…”

Free Cash Flow and Short-term Debt of Firms Listed at the Nairobi Securities Exchange Kenya

“…In Indonesia, the value of short-term debt was 48.9 USD billion in 2022. The national government debt of Indonesia was 516.5 USD billion in August 2023 as opposed to 520.8 USD billion in June [12].…”