Board characteristics and its influence or firm performance

What is it about?

The relation between performance and board size (BS) is analyzed in the American and European contexts. It is found that return on assets (ROA) depends on BS defined as an endogenous explanatory variable. This potentially non-monotonous effect is modeled by introducing firm size and number of segments by a board member as explanatory variables for ROA. BS net effect after accounting for the indirect effect resulting from these variables is negative. Differences in the results obtained for Tobin’s Q, strategic investors’ weight and equity to total assets, between America and Europe, suggest a more preventive management control in Europe.

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Why is it important?

For managers and shareholders to improve performance