Board Characteristics Best Practices and Financial Performance. Evidence from the European Capital Market

Victor-Octavian Müller (), Ionel-Alin Ienciu, Carmen Giorgiana Bonaci and Crina Ioana Filip
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Victor-Octavian Müller: Babes-Bolyai University, Cluj-Napoca
Ionel-Alin Ienciu: Babes-Bolyai University, Cluj-Napoca
Carmen Giorgiana Bonaci: Babes-Bolyai University, Cluj-Napoca
Crina Ioana Filip: Babes-Bolyai University, Cluj-Napoca

The AMFITEATRU ECONOMIC journal, 2014, vol. 16, issue 36, 672

Abstract: This study investigates board characteristics best practices in the particular context of European listed companies. The theoretical grounding of the paper is done by discussing board composition and board compensation related studies, mainly belonging to the corporate governance literature. The main objective of the paper is to contribute to the debate on whether certain board characteristics can be documented to represent best practices. In doing so, we investigate if such board characteristics significantly influence companies’ financial performance. We use econometric regression models in order to assess the impact of a series of corporate governance board related characteristics on the performance of companies (constituents of FTSE100) listed on the largest European capital market (London Stock Exchange), for the 2010-2011 period. An accounting measure of operating performance, namely the operating return on assets (ROA), is used. The profoundness of a potential impact of corporate board characteristics on companies’ performance is investigated by considering both contemporaneous and subsequent operating performance. Results document best practices through the existence of several significant associations between considered board characteristics and firm performance.

Keywords: board composition; board compensation; best practices; operating return on assets; corporate governance; FTSE 100; OLS regression. (search for similar items in EconPapers)
JEL-codes: G30 M12 M40 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:aes:amfeco:v:36:y:2014:i:16:p:672

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