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Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

Eugenio Zubeltzu-Jaka (), Eduardo Ortas () and Igor Álvarez-Etxeberria ()
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Eugenio Zubeltzu-Jaka: Department of Accounting and Finance, Basque Country University, Comandante Izarduy 23, 01006 Vitoria-Gasteiz, Spain
Eduardo Ortas: Department of Accounting and Finance, University of Zaragoza, Plaza de la Constitución s/n, 22001 Huesca, Spain
Igor Álvarez-Etxeberria: Department of Accounting and Finance, Basque Country University, Plaza de Oñati 1, 20018 San Sebastián, Spain

Sustainability, 2019, vol. 11, issue 24, 1-25

Abstract: This study not only revisits, from a meta-analytic perspective, the influence of firms’ boardroom independence on corporate financial performance, but also addresses the way that countries’ social and institutional contexts moderate that connection. A meta-regression covering 126 independent samples reveals that firms’ boardroom independence has a positive and negative effect on accounting and market-based measures of corporate financial performance, respectively. Further analyses reveal that while the firms’ board independence-financial performance connection is stronger in non-communitarian societies, that relationship becomes weaker in countries with greater developed mechanisms to protect the interest of minority investors. These results are robust to different model specifications and to the presence of a set of methodological control variables. Our results are of outstanding relevance for companies’ board composition processes by suggesting the way that corporations should actively re-balance the proportion of independent directors across different social and institutional contexts to ensure their financial success.

Keywords: corporate governance; boards’ independence; corporate financial performance; meta-analysis; meta-regression (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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