Boards of directors: composition and effects on the performance of the firm

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.

Independent director interlocks: effects and boundary on the earnings persistence of the firm

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How white is the global elite? An analysis of race, gender and network structure

“…These include longitudinal studies of minority groups such as Jews (Zweigenhaft 1982), Blacks (Zweigenhaft and Domhoff 2003), and women (Bernile et al 2018) within the boards and CEO-suite of the US corporate world. These studies, and others like them (Catalyst 2017;Deloitte 2017;Hagendorff and Keasey 2012;Martin and Herrero 2018;Mayer et al 2018;Zweigenhaft and Domhoff 2011), share three primary limitations. First, they measure diversity only with counts of the total number of minority group members in organizational leadership positions.…”

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