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Relevance of corporate boards in driving performance in the period that covers financial crisis

Relevance of corporate boards in driving performance in the period that covers financial crisis This paper aims to examine the relevance of boards in driving firm level performance. For this purpose, it considers firms listed on Ireland and Spain stock exchanges for the period 2005 to 2014, over a period that includes the global financial crisis.Design/methodology/approachThis study uses panel data regression analysis to analyse the effects of board characteristics on performance and also uses alternate model specifications to test the significance of robustness of relationships.FindingsThe impact of board size on performance is negative and significant for Irish and Spanish firms for the study period. In general, the board independence has a positive effect on the performance of Spanish firms for the complete study period and suggests consistency with the resource dependency theory.Research limitations/implicationsThe analysis suggests that in general, the non-executive and the board size do not affect the corporate performance of Irish and Spanish firms during the financial crisis. The fixed effects model suggests positive effects of gender diversity on performance for Spanish firms, while the random effects indicates negative relationship between gender diversity and performance for Irish companies.Practical implicationsThe evidence on the Spanish firms suggests that female representation on the boards may be critical during the financial crisisSocial implicationsThe quota legislation on female board representation in Spain is yielding superior results over the soft law approach by Irish firms during the times of financial crisis period.Originality/valueThis study contributes to the literature on the corporate governance practices and performance of two countries that were strongly affected by the crisis in the European Union. As governments increasingly contemplate board gender diversity policies, this study offers useful empirical insights on Spanish and Irish firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Relevance of corporate boards in driving performance in the period that covers financial crisis

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
DOI
10.1108/cg-11-2016-0204
Publisher site
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Abstract

This paper aims to examine the relevance of boards in driving firm level performance. For this purpose, it considers firms listed on Ireland and Spain stock exchanges for the period 2005 to 2014, over a period that includes the global financial crisis.Design/methodology/approachThis study uses panel data regression analysis to analyse the effects of board characteristics on performance and also uses alternate model specifications to test the significance of robustness of relationships.FindingsThe impact of board size on performance is negative and significant for Irish and Spanish firms for the study period. In general, the board independence has a positive effect on the performance of Spanish firms for the complete study period and suggests consistency with the resource dependency theory.Research limitations/implicationsThe analysis suggests that in general, the non-executive and the board size do not affect the corporate performance of Irish and Spanish firms during the financial crisis. The fixed effects model suggests positive effects of gender diversity on performance for Spanish firms, while the random effects indicates negative relationship between gender diversity and performance for Irish companies.Practical implicationsThe evidence on the Spanish firms suggests that female representation on the boards may be critical during the financial crisisSocial implicationsThe quota legislation on female board representation in Spain is yielding superior results over the soft law approach by Irish firms during the times of financial crisis period.Originality/valueThis study contributes to the literature on the corporate governance practices and performance of two countries that were strongly affected by the crisis in the European Union. As governments increasingly contemplate board gender diversity policies, this study offers useful empirical insights on Spanish and Irish firms.

Journal

Corporate Governance – Emerald Publishing

Published: Apr 3, 2019

Keywords: Corporate governance; Non-executive directors; Gender diversity; Resource dependency theory; Driscoll-Kraay; Ireland and Spain

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