Board Characteristics and Firm Performance

Journal of Modern Accounting and Auditing, Vol. 8, No. 5, 688-694

7 Pages Posted: 30 Apr 2013

See all articles by Masood Fooladi

Masood Fooladi

Islamic Azad University, Mobarakeh Branch

Date Written: May 28, 2012

Abstract

Based on agency theory, the importance of Corporate Governance (CG) is to reduce agency conflicts between those who control and those who own the residual claims in a firm. In other words, CG as a mechanism helps to align management's goals with those of the stakeholders that are to increase firm performance. Since, the value creation of CG can be measured through the firm performance; the aim of this study is to answer this question: "Is there any relationship between CG and firm performance?" Therefore, the four board characteristics that are of interest in this study are board independency, CEO duality, ownership structure, and board size. Based on a randomly selected sample of companies listed on Bursa Malaysia and applying the linear multiple regression as the underlying statistical tests, it is found that CEO duality has a negative relationship with firm performance (Return on Equity and Return on Asset) but there is no significant relationship between board independency, board size and ownership structure as independent variables and firm performance as dependent variable.

Keywords: corporate governance, board of directors, firm performance

JEL Classification: G34, M41

Suggested Citation

Fooladi, Masood, Board Characteristics and Firm Performance (May 28, 2012). Journal of Modern Accounting and Auditing, Vol. 8, No. 5, 688-694 , Available at SSRN: https://ssrn.com/abstract=2207846

Masood Fooladi (Contact Author)

Islamic Azad University, Mobarakeh Branch ( email )

Department of Accounting
Mobarakeh Branch
Mobarakeh, Isfahan
Iran

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