Link from Organizational Financial Performance to Reputation: The Role of Board Composition

Abstract

This research seeks to investigate the effects of organizational financial performance, managerial board composition on organizational reputation. Especially, it further explores the moderating influence of managerial board composition on the causal relationship between organizational financial performance and organizational reputation. A survey of 150 best publicly listed firm-year observations in Vietnam discovered that companies that achieve improved organizational financial performance could maintain and enhance their organizational reputation. It also revealed that firms where the majority of independent executives are in the managerial board often obtain better organizational reputation. The findings found out that at firms with the majority of independent executives in the board, their organizational financial performance would play a more vital role in maintaining and improving their organizational reputation. This research provides a comprehensive overview of the roles of organizational financial performance and the composition of directorial boards in building up and developing organizational reputation. This allows business managers to make better decisions on the proportion of independent executives in their managerial board, so achieve better organizational financial performance and then obtain higher organizational reputation.