Original scientific paper
https://doi.org/10.1080/1331677X.2018.1436454
Boards of directors: composition and effects on the performance of the firm
C. José García Martín
orcid.org/0000-0002-2886-3348
; Faculty of Economics, University of Valencia, Valencia, Spain
Begoña Herrero
; Faculty of Economics, University of Valencia, Valencia, Spain
Abstract
This paper analyses the structure of boards of directors and its impact
on business performance, which is approximated by economic
profitability and the Tobin’s Q ratio. We focus on three basic aspects
of boards that have been reviewed in the recent reform of the
Good Governance Code: the size of boards, their independence
and their diversity. For the study of diversity, we use an index that
integrates not only the gender of board members, but also their
age and nationality, since these are factors that can influence the
knowledge, experience and skills of the directors. The results confirm
a high degree of compliance with the recommendations of the Good
Governance Code, and suggest that the performance of the advisory
and monitoring functions are factors that determine the composition
of boards. With respect to the performance of the company, we
note that there is a negative and significant relationship with the
independence of boards. However, the results are sensitive to the
performance measure employed.
Keywords
Corporate governance; board of directors; size; diversity; independence; CEO power; Tobin’s Q; RO
Hrčak ID:
206089
URI
Publication date:
3.12.2018.
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