The association between board characteristics and the risk-adjusted return of South African companies

Gerrit Kok (), Cornelis H. van Schalkwyk and Elda Du Toit
Additional contact information
Gerrit Kok: Development of Southern Africa
Cornelis H. van Schalkwyk: University of Pretoria – Hatfield Campus
Elda Du Toit: University of Pretoria – Hatfield Campus

International Journal of Disclosure and Governance, 2021, vol. 18, issue 1, No 5, 58-70

Abstract: Abstract Purpose Regulatory documents and the literature recommend individuals with various characteristics to be included on a board, which should improve the efficiency of the board and promote company performance. Stakeholders have different expectations from a company, for which the literature holds the board accountable. Shareholders, for example, want superior returns, while government requires the implementation of transformation initiatives, especially in South Africa. It will therefore be valuable to several interested parties to know which board characteristics are likely to promote their objectives. Design/methodology/approach Binary logistic regression is used to analyse the relationship between various board characteristics and the risk-adjusted performance of a company. The dataset comprised 170 companies, from the 13 largest sectors/subsectors of the Johannesburg Stock Exchange for the period 2009 to 2015. Findings Percentage female (negative), chief executive officer remuneration (negative), chairman remuneration (positive) and non-executive director remuneration (positive) and the payment gap (positive) showed statistically significant relationships with the odds that a company is categorised as a top performer based on its risk-adjusted return. Practical implications The findings inform various parties whether the benefits ascribed to the various board characteristics, by the literature and regulations, are actually obtained. Originality/value The study moved away from the practice of looking for linearity in corporate relationships and expanded the list of board characteristics reviewed. It used a risk-adjusted performance measure, introduced innovative diversity measures, and focussed on South Africa.

Keywords: Risk-adjusted return; Sharpe ratio; Diversity; Market-based; Binary logistic regression (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41310-020-00096-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:pal:ijodag:v:18:y:2021:i:1:d:10.1057_s41310-020-00096-9

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41310

DOI: 10.1057/s41310-020-00096-9

Access Statistics for this article

International Journal of Disclosure and Governance is currently edited by Michael Alles

More articles in International Journal of Disclosure and Governance from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().