Board of directors, audit committee, and firm performance: Evidence from Greece

Haiyan Zhou, Stephen Owusu-Ansah and Anastasia Maggina

Journal of International Accounting, Auditing and Taxation, 2018, vol. 31, issue C, 20-36

Abstract: This paper investigates whether the characteristics of boards of directors and audit committees and the formation of the latter are associated with firm performance. Agency theory suggests that well-governed firms perform relatively better than their poorly-governed counterparts. However, resource dependency theory suggests that a board with more insider directors could have more expertise on how to better operate the firm, thus contributing to better firm performance. Using a sample of firms publicly traded on the Athens Stock Exchange during 2008–2012, we find that those having large-sized boards performed better, but firms having more independent board members performed poorly. We also find that firms with small-sized boards and those with boards having more independent members are more likely to form audit committees, but we failed to find any association between audit committee characteristics and firm performance. In addition, we do not find a negative relation between board independence and future firm performance. These findings suggest that boards of Greek firms take more active role in advising than monitoring. These findings have implications for policymakers, researchers, corporate managers, and investors, in general, and particularly, those in emerging markets.

Keywords: Board characteristics; Audit committee; Firm performance; Corporate governance; Agency theory; Resource dependency theory; Greece (search for similar items in EconPapers)
JEL-codes: G30 G34 M41 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:31:y:2018:i:c:p:20-36

DOI: 10.1016/j.intaccaudtax.2018.03.002

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