The Relationship Between Board Structure and Firm Performance in the Uk

The impact of board size on firm performance: evidence from the UK

“…In contrast to US findings, UK board size and structure is not determined by the costs and benefits of monitoring, although it is determined by advisory needs (Guest, 2008). The proportion of outside directors does not have a positive impact on general firm performance (Vafeas and Theodorou, 1998), or on specific monitoring tasks, such as CEO turnover (Cosh and Hughes, 1997;and Franks et al, 2001). 4 In the US, by contrast, although outsider proportion does not have a positive impact on overall performance, it does have a positive impact on specific tasks (Hermalin and Weisbach, 2003).…”

The king reports, independent non-executive directors and firm valuation on the Johannesburg stock exchange

“…First, they bring independent judgment to board decisions (Baysinger and Hoskisson, 1990;Ntim, 2009), which can impact positively on firm valuation. In particular, greater independence associated with INEDs grants them increased capacity to advise, monitor and discipline management to improve firm value by reducing managerial opportunism without fear or favour (Vafeas and Theodorou, 1998;Bhagat and Black, 2002;Jiraporn et al, 2009). …”

“…For example, Hermalin and Weisbach (1991) report no link between INEDs and firm valuation for a sample of 142 US listed firms. UK studies by Vafeas and Theodorou (1998) and Weir and Laing (2000) With specific reference to SA, the 1973 Companies Act requires every public company to appoint at least two INEDs. King II and the JSE Listings Rules also require SA corporate boards of directors to consist of a majority of NEDs.…”

“…Firstly, there is the issue of clearly defining who constitutes an INED, with most past studies simply classifying all outside directors as non-executive directors (NEDs) (Hermalin and Weisbach, 1991;Weir and Laing, 2000). However, some outside directors may have significant interests or connections with corporate executives (Zahra and Stanton, 1988;Bozec, 2005;Gupta and Fields, 2009), which can impair their independence, and thereby their ability to effectively advise, monitor and discipline management (Vafeas and Theodorou, 1998;Jiraporn et al, 2009). This suggests that a much subtle and stricter definition of who is an INED has to be introduced if her/his independence and monitoring capacity is not to be compromised.…”

Board Composition of Turkish Listed Companies: Is There Any Difference Between Industries

“…Another criticism is that, many research related to the board composition is limited to US data (Vafeas & Theodorou, 1998;Hyland & Marcellino, 2002). Therefore, research findings about the board composition of the organizations operating in other countries, and especially in developing ones will be an important contribution to the literature.…”