Board Characteristics Research Articles

Do religious values mitigate the effect of formal corporate governance rules on earnings management in Islamic countries? Evidence from Jordan

Purpose This study aims to assess the board of directors’ effectiveness in curbing earnings management (EM) in Jordan, a country where Islamic religious values strongly influence corporate practices. Design/methodology/approach Using a sample of 51 Amman Stock Exchange-listed firms from 2012 to 2022, generalised least squares regression is used to examine the association between board characteristics and EM. Findings Most board characteristics do not significantly affect EM. Interestingly, board activity is significantly and positively associated with EM, suggesting that the board’s monitoring function has been relegated to a secondary role. Research limitations/implications Formal corporate governance mechanisms may prove ineffective, as their effectiveness in limiting EM is undermined by informal rules. Practical implications Regulators should adapt corporate governance rules to the context in which they are embedded. Greater attention to religious dynamics could improve board oversight effectiveness. Originality/value This study provides a new perspective to analyse the relationship between corporate governance and EM. To the best of the authors’ knowledge, this is among the first studies to explore this issue within the context of Islamic countries.

The Impact of Board Gender Diversity Commitment on Firm Performance Moderated by Board Characteristics: Evidence From Sustainable European Firms and Financial Orientation

ABSTRACTThe main goal of this study is to explore the moderating role of board gender diversity on the relationship between CEO duality, board size, board meetings, and firm performance in sustainable companies. This study examines the 120 most sustainable European firms listed in the EuroNext Vigeo Europe 120 Index from 2012 to 2021, with the findings showing that board gender diversity negatively moderates the relationship between CEO duality and firm performance, while positively moderating board meetings' impact. Furthermore, in banking‐oriented countries, board gender diversity positively moderates the relationship between board meetings and firm performance, while these effects are not significant in market‐oriented countries. The paper highlights that despite progress in increasing representation, mechanisms to ensure effective female participation in board decision‐making are required. This study is the first to examine how board gender diversity moderates the impact of board characteristics and CEO duality on sustainable firm performance in different financial orientations.

The link between board characteristics and EU competition law infringements

The link between board characteristics and EU competition law infringements

Can effective board drive environmental innovation? The moderating power of CSR committee

Purpose This study aims to investigate the impact of various board characteristics on environmental innovation (EI) among companies listed on the STOXX Europe 600. It also examines the moderating role of CSR committees on the board–EI nexus. Design/methodology/approach The sample consists of companies listed on the STOXX Europe 600 index over 12 years (2011–2022). This study uses the Refinitiv Eikon database to evaluate the extent of EI. Panel data regression analysis is used, with two-stage least squares and lagged models used as robustness tests to control for endogeneity. Findings The results indicate that board independence and gender diversity significantly increase EI, whereas CEO duality negatively impacts it. Other board attributes, such as board size, show no impact on EI. In addition, the presence of CSR committees moderates these relationships, enhancing the positive effects of gender diversity and board independence and mitigating the negative impact of CEO duality. Practical implications This study provides valuable insights for policymakers and corporate strategists aiming to advance environmental responsiveness through strategic board composition and establishing CSR committees. Emphasizing the importance of board independence, gender diversity and CSR committees, the findings suggest practical pathways for enhancing the adoption of EI by creating governance structures that support sustainable practices. Originality/value To the best of the authors’ knowledge, this is the first study to examine the moderating role of CSR committees on the associations between board characteristics and EI. This research addresses a crucial gap in the current literature, enriching the understanding of corporate governance and sustainability. It provides critical insights for developing policies and strategies that promote EI through effective board composition and the implementation of CSR committees.

A Skills Gap Analysis of Farmer Directors of US Farmer Cooperatives

ABSTRACTBoards of directors are vital to firm performance and are an integral part of the decision‐making process of any business. Several studies have been conducted that observe corporate or nonprofit board characteristics, skills, and the board's connection to firm performance. In the cooperative space, the literature has focused on exploring the impact directors have on governance and policy. Only a few studies have examined director skills. The present study adds to this literature by identifying the skill gaps for directors of US farmer cooperatives, and what skills are most important for a director to possess. We found that the largest skill gaps were in cooperative governance and policy and cooperative finance. Time management was found to be the least important skill for directors to possess. Asking critical questions, strategic planning, and understanding current economic and industry conditions were consistently among the top three skills.

The Big 4 audit dilemma: Board characteristics, audit quality, and sustainability disclosure in Malaysian companies

Our study investigates the relationship between firm profitability, board characteristics, and the quality of sustainability disclosures, while examining the moderating effects of financial leverage and external audit assurance. A key focus is the distinction between Big 4 and non-Big 4 audit firms. Using data from Malaysia’s top 100 publicly listed organizations from 2018 to 2020, we analyze sustainability reports based on the Global Reporting Initiative (GRI) standards. Unexpectedly, our results indicate a negative association between firm profitability and board characteristics, challenging traditional assumptions. We find that non-Big 4 audit firms significantly enhance sustainability disclosure quality, contradicting the widely held belief in the superiority of Big 4 firms. Our finding introduces the “Big 4 dilemma” in the Malaysian context and calls for a reassessment of audit firm selection practices. Our study offers new perspectives on the strategic role of board composition and audit firm selection in advancing sustainability disclosures, urging Malaysian organizations to evaluate audit firms on criteria beyond the global prestige of Big 4 firms to improve sustainability reporting.

Board characteristics and audit quality: the moderating effect of board independence change

Board characteristics and audit quality: the moderating effect of board independence change

The Effect of Board Characteristics on the Disclosure of Islamic Social Reporting in Islamic Banks in Asia

This study aims to examine the disclosure of Islamic social reporting in Islamic banks that publish annual reports and are listed on the stock exchange of each country in Asia. This study focuses on Islamic banks that are listed on the stock exchange in 2022. A total of 100 Islamic banks were included in the data set, selected through the purposive sampling method. The independent variables are board size, the proportion of independent commissioners, and the frequency of board meetings. The concept of agency theory suggests that the role of the board is to monitor and evaluate the reporting and disclosure practices of a company, particularly in the context of social reporting within Islamic banking. The characteristics of the board of commissioners have generally been identified as factors with the potential to influence corporate disclosure. The results of this study show that the size of the board of commissioners and the frequency of board meetings have a significant positive relation with the disclosure of Islamic social reporting. Conversely, the proportion of independent board members has been found to exert a significant negative influence on the disclosure of Islamic social reporting.

Disaggregating air, water and renewable energy disclosures in developing economies: the role of regulatory impact and board characteristics

PurposeThis study examines how board characteristics influence air, water and renewable energy (AWR) disclosures in an emerging economy. It argues for the necessity of separating these disclosures to address unique environmental impacts and stakeholder concerns.Design/methodology/approachUsing longitudinal data from environmentally sensitive firms (2014–2022), a disclosure index based on the Global Reporting Initiative (GRI) framework was developed to quantify AWR separately. To address potential statistical issues such as endogeneity and selection bias, the analysis employed a set of robust regression models, including the industry fixed effects (FE) model, a lagged model and a two-stage least squares (2SLS) model.FindingsBoard size and audit committees positively influence all AWR disclosures, while foreign directors significantly impact air and renewable energy disclosures. Board meetings negatively affect water disclosures. Surprisingly, board independence shows no significant impact, and gender diversity has no notable relationship. Post-amendment, firms increased AWR disclosures, though participation remains limited.Research limitations/implicationsGrounded in legitimacy theory, this study contributes to the literature by demonstrating how separating the unique characteristics of AWR disclosures offers stakeholders more precise insights into how firms manage specific environmental concerns. The findings are based on data from listed firms in Bangladesh and may not be generalisable to unlisted firms or other regions.Practical implicationsThe study emphasises the importance of distinct AWR reporting, offering valuable insights for regulators and corporate boards to improve transparency and sustainability practices.Social implicationsSeparating AWR disclosures provides stakeholders with clearer assessments of firms' environmental performance, promoting accountability and informed decision-making.Originality/valueThis study uniquely emphasises the need for disaggregating air, water and renewable energy disclosures in emerging economies. By focussing on each environmental issue separately, the research highlights how distinct disclosures offer clearer insights into how firms address specific environmental challenges, such as air pollution, water management and the transition to renewable energy sources. This disaggregation is essential for stakeholders – particularly regulators, investors and policymakers – to assess and respond to firms' sustainability efforts accurately.

Governance of healthcare quality: exploring the relationships between hospital board performance and healthcare quality outcomes

PurposeThis paper aims to contribute to the existing literature in the field of hospital governance by exploring the relationship between the attributes and performance of hospital boards and hospital performance in terms of quality of healthcare.Design/methodology/approachA survey of board performance in public hospitals in Morocco was carried out, in which we surveyed all board members of the 13 hospitals in the Casablanca-Settat region. A total of 82 members responded (82% response rate) to the previously adapted and validated self-evaluation questionnaire on board self-assessment questionnaire (BSAQ) board member performance.FindingsOn average, the hospital boards studied had eight members. In terms of clinical expertise, half the members were physicians and 17% were nurses. In addition, positive correlations were found between certain board characteristics, notably age, seniority, members' perceptions of their impact on the quality of healthcare and several dimensions of board performance. In parallel, the results showed strong and significant associations between turnover rate and BSAQ score. Negative correlations were also found between average length of stay and BSAQ score. With regard to mortality parameters, it should be noted that we were unable to establish a strong empirical correlation between hospital boards' self-assessed performance and other hospital mortality indicators.Research limitations/implicationsThe present study offers a rigorous rationale for the use of the French-translated BSAQ in the hospital context, and we hope that others will use this tool in future work within the framework of evidence-based research. In addition, the BSAQ tool’s focus on board competencies (and not just structure, composition or processes) provides valuable insights into what boards need to learn in order to function effectively. However, despite the insistence of the authors of this study on the need for a comprehensive census of public hospital board members in the region, several obstacles were encountered. Firstly, there were difficulties related to vacancies within the hospitals, which had the effect of restricting the representativeness of the sample. Secondly, access to hospital board members proved complex due to their busy schedules and the confidential nature of their meetings. Finally, it is important to note that national performance indicators in Morocco may not be as reliable as in other countries, which could complicate the identification of high-performing hospital systems and, consequently, make inference difficult.Originality/valueThis study provides large-scale empirical evidence of processes related to the governance of quality of healthcare and elucidates the existence of an association between hospital board performance and clinical performance. The use of validated tools such as the BSAQ should therefore help improve the performance of boards and governance in public hospitals.

Tracing the path to sustainable governance: CSR committees as mediators of board impact on ESG performance in the MENA region

Purpose This study aims to explore the mediating role of corporate social responsibility (CSR) committees in the relationship between board characteristics and environmental, social and governance (ESG) performance, specifically within the Middle East and North Africa (MENA) region. Design/methodology/approach Based on a panel of 178 firms spanning 2015–2022, the analysis uses Baron and Kenny’s (1986) mediation approach, supplemented by structural equation modeling (SEM) path analysis for robustness. Findings The findings demonstrate that CSR committees play a significant mediating role in the impact of board size, expertise and gender diversity on ESG performance. Furthermore, the study confirms the direct, positive influence of both board characteristics and the presence of CSR committees on ESG performance, underscoring their strategic importance in fostering sustainability in this regional context. Practical implications The findings highlight the strategic importance of diversifying and enhancing board skills to improve ESG performance. Companies are encouraged to recalibrate their governance frameworks to leverage the mediating influence of CSR committees and promote sustainable business practices. Social implications By demonstrating the positive effect of CSR committees on ESG performance, this study aligns with global trends in responsible business conduct and highlights the importance of corporate governance in addressing environmental and social challenges. This alignment is critical for achieving sustainable development goals and reinforcing stakeholder trust in the region. Originality/value This research provides novel empirical insights into the mediating effect of CSR committees within the MENA region, offering a unique contribution to the discourse on corporate governance and sustainability. By highlighting region-specific governance dynamics that shape ESG outcomes, it deepens the understanding of effective governance practices.

Corporate Board Characteristics of Family-Managed Firms and it’s Impact on Firm Performance

Well-balanced and active corporate boards ensure effective corporate governance in family firms. Studies in the area of corporate governance across the globe made considerable effort to study the composition of corporate boards and their effectiveness. The present study is an effort to evaluate the impact of board characteristics on the performance of selected Indian family-managed firms. The paper encompasses how various board parameters such as board size, board independence, the duality of the chairman, gender diversity, and inclusion of foreign directors in the board impact a firm's market and accounting performance measures. The data is collected from the CMIE PROWESS Database, consisting of 173 family-managed firms belonging to 11 macro-industrial sectors selected. The panel data used for the study consist of 2076 observations for 12 years, from 2010-11 to 2021-22. The study uses regression analysis to evaluate the impact of board characteristics on performance measure indicators Tobin’s Q and ROA of the firms.

Board characteristics and profitability in sharia-compliant and non-sharia-compliant firms: beyond mere ceremony?

PurposeThis study compares the profitability of sharia-compliant firms (SCFs) and non-sharia-compliant firms (NSCFs) and explores the causal links among board of directors (BODs) characteristics (size, gender, meeting frequency, tenure, turnover and compensation), sharia compliance, capital structure and profitability. Specifically, sharia compliance and capital structure serve as moderators.Design/methodology/approachA total of 72 SCFs and 65 NSCFs were investigated during 2011–2019, resulting in 1,644 data. A t-test was used to compare profitability, and causal relationships were explored through panel data regression.FindingsSCFs outperform NSCFs in profitability in 24 of 36 t-tests. Surprisingly, 87 out of 864 instances of sharia violations were found in SCFs. Despite purifying sharia-compliant stocks from violations, the board negatively affected sharia compliance. Furthermore, sharia compliance contradicts the board’s tendency to increase profitability, implying a ceremonial screening, which reveals the board’s reluctance to incorporate sharia compliance into their management style. In contrast, boards in NSCFs rely more on their internal strengths and capacities to influence profitability, as they understand the adverse impact of debt.Practical implicationsThe findings of this study are beneficial for evaluating Islamic loopholes for both boards that are apathetic to sharia compliance and regulators who are not transparent in Islamic financial screening.Originality/valueAcademic literature concentrates on comparing Islamic banks with conventional banks, while the comparison of corporate governance and management styles in SCF vs. NSCF is minimal. Additionally, a novel measurement, the Stapel scale, is proposed for finding the purity of Islamic stocks, which is most suitable when regulators and firms conduct Islamic loopholes.

The impact of board gender diversity on green building practices: Moving beyond traditional linear and logistic specifications

AbstractThis article examines the relationship between sustainability and gender equality by analyzing how the percentage of women on the board of directors (still less than 50% in most cases) influences a company's commitment to green building practices. For this analysis, we estimate 30 competing multivariate pooled and panel data logistic specifications, including the gender diversity factor in both its traditional and polynomial forms. This methodological innovation (the polynomial form) allows for the examination of gender diversity's relationship with other variables beyond conventional models that assume constant effects, thus enabling a more realistic depiction of impacts that vary with the degree of diversity. Our dataset includes companies listed on the Euro Stoxx 300 and Standard & Poor's 500 for the period 2010–2021. The findings indicate that, in both indices, an increased percentage of women on the board (and a higher Blau diversity index) correlates with a greater propensity for sustainable building practices, up to a threshold nearing parity. The impacts are more significant in Europe than in the U.S., where board gender diversity appears to have a lesser influence on green building initiatives. The specification that best models the relationship between sustainable building practices and gender diversity, along with other relevant factors, is a multivariate panel data logistic model with the gender diversity factor included as a cubic polynomial for companies listed on the Euro Stoxx 300. A similar model, but with the gender factor in a quadratic polynomial form, was selected for companies listed on the Standard & Poor's 500. Therefore, the impact function of gender diversity on sustainable building practices is not constant but depends on the existing degree of board gender diversity, with the shape of the impact function differing between Europe and the U.S. Additionally, the study finds that other board characteristics—larger boards, longer tenures of directors, and higher compensation for senior executives—are associated with an increased propensity towards green practices in both the European and U.S. contexts. Conversely, linking CEO compensation to shareholder returns reduces this propensity. Moreover, the number of non‐executive directors and the overlap between the Chairperson and CEO positions do not significantly impact this propensity.

Board Characteristics and Dividend Pay-Out Policy in Nigerian Consumer Good Firms

This study interrogates the interplay between board attributes and dividend payout policy amongst listed in Nigerian manufacturing firms. The research focuses on various board attributes, including board size, board independence, gender diversity, and board ownership, to determine their influence on the dividend decisions of firms. Using panel data from a sample of Nigerian manufacturing companies listed on the Nigerian Stock Exchange (NSE) from 2013 to 2022, the study employs multiple regression analysis to evaluate the effect of these variables on dividend per share. The results indicate that board independence positively influence dividend payouts, while board diversity and board ownership have negative non-significant effect on the criterion variable using t-statistics. These findings suggest that a well-structured board can enhance firm decision-making, leading to higher shareholder returns. The study recommends that policymakers and firm managers should consider the composition and governance of boards when devising strategies related to dividend payouts to optimize corporate performance and shareholder value.

Evaluating Board Characteristics’ Influence on the Readability of Annual Reports: Insights from the Egyptian Banking Sector

This study aims to examine the impact of board characteristics (BCs) on banks’ annual reports readability (BARR). Further, it examines whether bank size (BS) moderates the association between BC and BARR. The study employs a sample of 208 bank-year observations from both listed and non-listed banks in the Egyptian stock exchange (EGX), utilizing data spanning from 2016 to 2023. The study employs a random-effect regression model to test the hypotheses and discuss the results. The results suggest that BARR has a significant association with board meetings, gender and cultural diversity. Furthermore, BS played a moderating role in determining the association between BCs and BARR, supporting the second hypothesis. The findings show that the BCs and disclosure quality differ for banks of varying sizes. The findings have practical implications for the Egyptian banking sector, highlighting that board structure is critical to transparency and maintaining public trust. Additionally, the results focus policymakers’ attention on standardizing the contents and structure of banks’ annual reports, with the aim of reducing managers’ manipulation of disclosures and reducing the level of information asymmetry between stockholders, as suggested by the agency theory.

Board Characteristics and Environmental Performance

Board Characteristics and Environmental Performance

Corporate governance characteristics and involvement in ESG activities: current trends and research directions

PurposeThis study aims to conduct a comprehensive literature review to examine the relationship between corporate governance characteristics and firms’ engagement in environmental, social and governance (ESG) activities. The review focuses specifically on academic papers published in ranked accounting and finance journals.Design/methodology/approachThe analysis combines a structured literature review with citation analysis, topic modeling using a machine learning (ML) approach and a manual review of selected articles published between 2000 and 2021.FindingsThis paper contributes to corporate governance and ESG literature by conducting an in-depth review, offering a comprehensive analysis of the existing findings and identifying future research directions. From the reviewed literature, this paper proposes the following thematic areas: board characteristics, ownership structure and their impact on a company’s engagement in ESG activities; CEO characteristics and their influence on a company’s involvement in ESG activities; corporate governance and ESG as sources for transparency and legitimacy; internal and external assurance of a company’s involvement in ESG activities; and gender diversity and a company’s involvement in ESG activities.Originality/valueThe study provides a comprehensive understanding of corporate governance and ESG literature. The innovative combination of methods, including ML and manual techniques, enhances the ability to identify key research topics and uncover research directions in the field. Moving forward, this paper suggests several promising directions for future research, including examining the influence of emerging technologies on ESG reporting and assessing the impact of regulatory changes and context on the link between corporate governance and firms’ involvement in ESG practices.

The Relationship between Board Characteristics and Corporate Credit Ratings—Evidence Based on the Chinese Market

Credit ratings serve as a critical mechanism for investors to assess corporate credit risk and mitigate investment risk, while a well-managed board is central to addressing principal-agent problems and thereby effectively reducing a firm's default risk. However, research on the impact of board characteristics on credit ratings rarely focuses on individual characteristics. This study focuses on board composition, board member quality, board motivation, and board governance to provide a more comprehensive description of the impact of board characteristics on corporate credit ratings. Using data on Chinese A-share listed companies from 2010 to 2020, the findings are as follows.(1)Board composition, quality, motivation and leadership have a significant impact on corporate credit ratings. (2)Board characteristics affect corporate credit ratings by influencing internal control, surplus management, and accounting disclosure quality. (3)Under the socialist economy with Chinese characteristics, the influence of board characteristics on corporate credit ratings is significantly higher in regions with higher levels of marketization. Overall, our findings provide new insights into the effect of board characteristics on credit ratings.

Exploring the impact of fintech innovation on dividend payout decisions: the roles of intellectual capital and board characteristics

Exploring the impact of fintech innovation on dividend payout decisions: the roles of intellectual capital and board characteristics