Do Board Characteristics Matter for Growth Firms? Evidence from China

Qiuwei Li,Wei Zhou,Jiaxuan Chen,Hui Zhou

doi:10.3390/jrfm14080380

Abstract

Previous research on the effect of board characteristics mostly examines established firms. This raises the question of whether the findings from the board characteristics literature are applicable to rapidly growing enterprises, as their corporate governance landscape can be very different from that in large, mature companies. Our paper extends the corporate governance literature by investigating the performance implications of board characteristics in startups using a unique set of firms: 121 startups operating in the information technology industry listed on the Growth Enterprise Market (GEM) in China. Using a firm performance indicator constructed through the factor analysis method, we find significant correlations between firm performance and board size, age structure, board meeting frequency, and board ownership of shares. Our findings contribute to the corporate governance literature by shedding new light on the performance implications of board characteristics for startups operating in fast-paced industries.

Highlights

Management 14: 380. https://The board of directors has ultimate authority in corporate decision making and the formation and structure of the board can have important implications for corporate governance as well as firm performance (Adams and Ferreira 2007; Adams et al 2010; Farag et al 2014; Mallin and Ow-Yong 2012)
This study extends the corporate governance literature by investigating the performance implications of board characteristics in startups using a unique set of firms: 121 startups operating in the information technology industry listed on the Growth
The results indicate that board size is positively related with firm performance for growth firms

Summary

Introduction

Management 14: 380. https://The board of directors has ultimate authority in corporate decision making and the formation and structure of the board can have important implications for corporate governance as well as firm performance (Adams and Ferreira 2007; Adams et al 2010; Farag et al 2014; Mallin and Ow-Yong 2012). Previous research shows that firms have different governance requirements as they evolve through their life cycle and boards of directors for startups can take on different roles and functions than those for established firms (Ingley and van der Walt 2003; Ingley and McCaffrey 2007). This study extends the corporate governance literature by investigating the performance implications of board characteristics in startups using a unique set of firms: 121 startups operating in the information technology industry listed on the Growth. We take advantage of the annual disclosure requirements for firms listed on GEM to study the performance implications of board characteristics for growth firms in high-tech industries.

Methods

Results

Discussion

Conclusion