Company financial performance: Does board size matter? Case of the EUROSTOXX50 index

Mercedes Rodríguez Fernández

Cuadernos de Gestión, 2015

Abstract: [EN] This study analyzes the relationship between board size and economic-financial performance in a sample of European firms that constitute the EUROSTOXX50 Index. Based on previous literature, resource dependency and agency theories, and considering regulation developed by the OECD and European Union on the normative of corporate governance for each country in the sample, the authors propose the hypotheses of both positive linear and quadratic relationships between the researched parameters. Using ROA as a benchmark of financial performance and the number of members of the board as measurement of the board size, two OLS estimations are performed. To confirm the robustness of the results the empirical study is tested with two other similar financial ratios, ROE and Tobin s Q. Due to the absence of significant results, an additional factor, firm size, is employed in order to check if it affects firm performance. Delving further into the nature of this relationship, it is revealed that there exists a strong and negative relation between firm size and financial performance. Consequently, it can be asseverated that the generic recommendation one size fits all cannot be applied in this case; which conforms to the Recommendations of the European Union that dissuade using generic models for all countries.

Keywords: corporate governance; board size; ROA; ROE; Tobin´s Q; EUROSTOXX50 index; gobierno corporativo; tamaño del consejo de administración; Q de Tobin; índice EUROSTOXX 50 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://addi.ehu.eus/handle/10810/15777 (application/pdf)

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:ehu:cuader:15777

Ordering information: This journal article can be ordered from
Instituto de Economía Aplicada a la Empresa, Revista Cuadernos de Gestión, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
https://ojs.ehu.eus/index.php/CG

Access Statistics for this article

Cuadernos de Gestión is currently edited by Pilar Fernández

More articles in Cuadernos de Gestión from Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE) Instituto de Economía Aplicada a la Empresa Avda Lehendakari Aguirre 83 CP 48015 Bilbao (Vizcaya) Spain. Contact information at EDIRC.
Bibliographic data for series maintained by Alcira Macías Redondo ().