Board of Director's Role in Enhancing Financial Performance of the Indian Nifty 50 Listed Companies (original) (raw)

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

2023

The agency issues between shareholders and management push corporate governance issues into limelight. Our study's objective is to examine the consequences of board characteristics on a firm's financial performance. Board size, independent directors, CEO-duality, number of independent directors in the audit committee, promoter's shareholding, and board meetings have been chosen as the board variables. The fixed effects method has been applied to investigate the effect of board variables on company's performance using a panel data framework. This study demonstrates that board of directors has an impact on firm performance and the independent directors are necessary for the audit committee to improve performance. They indicate indirectly that the automobile sector has a chance to improve firm performance by strengthening the governance system with a wellbalanced board composition. Additionally, audit committee with high number of independent directors ensures independent judgment and oversight during the audit of financial statements.

BOARD CHARACTERISTICS RELATING TO FIRMS PERFORMANCE: A STUDY ON MANUFACTURING FIRMS IN INDIA

Journal of Commerce & Accounting Research, 2017

The present research study will throw light on the fact whether board characteristics have any impact on the financial performance of manufacturing companies belonging to Bombay Stock Exchange (BSE) during 2010-11 to 2014-15. This study has investigated the independent variables and dependent variables, i.e. the firm’s performance related indicators such as ROA, ROE and Tobins Q which depend upon the accounting and market based measures. The eight independent variables area taken into consideration for the study especially for board characteristics and control variable of the firm which might have some impact on the firms’ performance covering 275 companies under 18 major sectors. The OLS regression has been tested to find out the determinant factors of firms’ performance in relation to board characteristics. It is observed from the study that board characteristics (size, independence, meeting) are significant negative relationship exists towards firms’ performance indicators. In this study further attempt has been made to examine the determinant factors of firms’ performance such as board size, board Independence, CEO duality, and size of the firm are significantly influencing factors of manufacturing firms in India.

Effect of the Board of Directors on Firm Performance

This paper aims to study the relationship between three characteristics of the Board of Directors (Board Size, Independent Members, and Number of Meetings) and performance (ROA, ROE) in Colombian firms during the 2008-2014 period. The analysis was performed using regression models in a balanced data panel that considered random effects. The results show that BD optimal size for the Colombian case is between 6 and 10 members; and there is no evidence to affirm that the relationship between the characteristics of the studied BD and economic performance is significant.

Impact of Firm Performance on Board Characteristics: Empirical Evidence from India

IIM Kozhikode Society & Management Review, 2015

This study attempts to examine the impact of prior and current firm performance on board composition as it is the least explored issue in the corporate governance area. For this purpose, our analysis covers a large sample of the Indian manufacturing firms for the period 2001–2010. We utilize a range of measures of firm performance such as return on assets, return on equity, net profit margin, adjusted Tobin’s q and stock returns in the analysis. We also use a range of alternative measures of board characteristics like board size, independence and meetings in the estimation process. The results of the study show that firm performance has a negative impact on board characteristics. Findings of the study also indicate that the larger board, outside membership and more meetings are considered as expensive affairs in the firm. Our findings in this study are expected to generate further debate on the related issue and sensitize the scholars to reason further research in this area especial...

Board of directors and investment performance: A marginal Q approach

Accounting

This paper aims to contribute to the debate on the effect of board characteristics on firm performance. We use marginal q to estimate the effect of board characteristics on investment performance. Using data of 1616 firms that traded on the Standard and Poor´s (S&P) 1500 between 1997 and 2014, we use between and fixed effects estimators to capture the long-run effects and control other endogeneity problems as omitted variable bias. We find a negative and statistically significant effect of board size on investment performance. For the sample under study, we also find empirical evidence on the nonlinear relation between board independence and investment performance. Finally, using two different measures, we also find a nonlinear relation between board busyness and investment performance.

Do the Board of Directors' Characteristics Influence Firm's Performance? The U.S. Evidence

Prague Economic Papers, 2012

We examine the relationship of selected Board of Directors´ characteristics and firm´s financial performance. Using a sample of large U.S firms in 2005-2009, we find that the degree of insiderownership influences positively fi rm performance, because it reduces agency problems. The age of the Board of Directors matters, to a certain degree, as well. Younger members are probably willingto bear more risk and to undertake major structural changes to improve firm´s future prospects. On the other hand, we find that independent directors reduce firm performance and this negative effectwas even more important during the recent financial crisis. We suppose that independent directors prefer overly conservative business strategies in order to protect shareholders, but this goes atthe cost of lower firm´s performance. All in all, our results suggest that corporate governance is important for firm´s financial performance.