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Board independence, frequency of meetings and performance

Board independence, frequency of meetings and performance This study aims to investigate the relationship between board structure and performance from an Islamic point of view.Design/methodology/approachConsequently, the researcher developed a multiple linear regression model to investigate the nature of this relationship, whereby return on assets (ROA) was used to measure the performance of listed Islamic Banks in Gulf Cooperation Council, covering the period between 2013 and 2016.FindingsThe results indicated a negative relationship between board structure and the performance of Islamic banks.Research limitations/implicationsBecause the current study only used accounting-based performance indicator (ROA), the researcher suggests expanding the framework of this study through the addition of market-based performance indicators such as Tobin’s Q.Practical implicationsTherefore, the researcher recommends that regulators of Islamic banks in the GCC need to develop a set of strict restrictions for the selection of independent members of the board and to minimize the meetings of the board to reduce the cost of preparing information and the information asymmetry, thus improving performance.Originality/valueThis study provides guidelines regarding the appropriate number of independent directors and board meetings that will result in reduced monitoring costs and improved profits. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Islamic Marketing Emerald Publishing

Board independence, frequency of meetings and performance

Journal of Islamic Marketing , Volume 10 (1): 14 – Feb 22, 2019

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1759-0833
DOI
10.1108/jima-01-2018-0017
Publisher site
See Article on Publisher Site

Abstract

This study aims to investigate the relationship between board structure and performance from an Islamic point of view.Design/methodology/approachConsequently, the researcher developed a multiple linear regression model to investigate the nature of this relationship, whereby return on assets (ROA) was used to measure the performance of listed Islamic Banks in Gulf Cooperation Council, covering the period between 2013 and 2016.FindingsThe results indicated a negative relationship between board structure and the performance of Islamic banks.Research limitations/implicationsBecause the current study only used accounting-based performance indicator (ROA), the researcher suggests expanding the framework of this study through the addition of market-based performance indicators such as Tobin’s Q.Practical implicationsTherefore, the researcher recommends that regulators of Islamic banks in the GCC need to develop a set of strict restrictions for the selection of independent members of the board and to minimize the meetings of the board to reduce the cost of preparing information and the information asymmetry, thus improving performance.Originality/valueThis study provides guidelines regarding the appropriate number of independent directors and board meetings that will result in reduced monitoring costs and improved profits.

Journal

Journal of Islamic MarketingEmerald Publishing

Published: Feb 22, 2019

Keywords: Performance; Corporate governance; Islamic banking; Board independence; GCC; Frequency of meetings

References