An Empirical Analysis of Board Structure, Composition and Firm Performance Using 30 UK Listed Companies
Nkasi, E. Ernest
Department of Accountancy
Federal polytechnic, Bali- P.M.B 05 Bali, Taraba State
Email: stanleynkasi@gmail.com
ABSTRACT: This study examines the empirical analysis of board structure and composition as well as firm performance. Using a sample of 30 UK listed companies, the results confirms that there is no positive relationship between board structure, composition and firm performance in these 30 UK listed firms. It is worth noting that, the major characteristics of corporate governance identified in this research paper are board structure, board composition and firm performance. These results neither did support agency theory, resource dependence and stewardship theory. The empirical evidence of outside board directors and firm performance is mixed. However, some studies such as daily and Dalto(1992), Tian and Lau (2001) and Luan and Tang (2007) concluded in their findings that having more outside independent directors on their boards improves firm performance hence supporting agency theory. It is not surprising to expect such negative relationship between board structure and composition and firm performance considering the limited sample size of 30 UK listed companies used in the research. The findings of this research shows that board composition is inversely related to the corporate value because the advantages of monitoring larger boards are outweighed by problems associated with the growing asymmetric information, and additionally larger board sizes are likely to have raised coordination costs, which lessens effective monitoring. Secondly there are other variables other than the ones the researcher used to measure firm performance for example corporate social responsibility.
Keywords: Board structure and composition, firm performance, outside independent directors, agency and stewardship theory
