Firm Performance: Do Non‐Executive Directors Have Minds of their Own? Evidence from UK Panel Data

Roberto Mura

Financial Management, 2007, vol. 36, issue 3, 81-112

Abstract: I investigate the relation between firm performance and both ownership structure and board composition. Use of the GMM methodology permits simultaneous control of both endogeneity of the independent variables and fixed effects. The data comprise an original, large, hand‐collected panel dataset of UK firms for the period 1991–2001. Results indicate that the direction of causality runs from ownership and board composition to performance. I find a cubic relation between performance and ownership by executive directors. The proportion of non‐executives on the board, but not their proportional ownership, is significantly and positively related to firm performance. Finally, the relation between performance and blockholdings by institutional and non‐institutional owners is negative. Thus, results indicate that only non‐executive directors are effective monitors.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

Downloads: (external link)
https://doi.org/10.1111/j.1755-053X.2007.tb00082.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finmgt:v:36:y:2007:i:3:p:81-112

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0046-3892

Access Statistics for this article

Financial Management is currently edited by William G. Christie

More articles in Financial Management from Financial Management Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().