Corporate Governance Impact on Firm Performance Dissertation

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Introduction

The modern business world is highly competitive, which makes the strategic development of companies, as well as their proper functioning, critical to their survival. Corporations became a widespread phenomenon in the twentieth century, and they became an indispensable part of the Chinese economic landscape in the 1990s (Jiang & Kim, 2015). Western corporate governance has been explored in detail while Chinese corporations have attracted scholars’ attention comparatively recently.

It is noteworthy that the majority of studies are mainly based on the theoretical foundations that have been applied in the Western world although some researchers argue that these approaches do not necessarily fit in all Chinese contexts or can be utilized with every company (Ji, Ahmed, & Lu, 2015; Zhang, Luan, Shao, & Xu, 2016).

Nevertheless, the use of the most common theoretical frameworks can be beneficial for the analysis of the corporate governance of Chinese organizations. The primary focus of this review is the relationship between corporate governance and such aspects as ownership structure, the board size, and its diversity (see Appendix). This literature review explores the existing trends in the field of corporate governance including the most common theoretical approaches employed in academia.

Theoretical Framework on the Relationship Between Corporate Governance Variables and Performance

Corporate governance has been a topic of extensive research for decades. Researchers have focused on different aspects and employed various approaches, which ensured the development of several theoretical frameworks that guide modern research on the matter as well as the development of strategic plans in companies. Gaur, Bathula, and Singh (2015) note that agency theory is regarded as the mainstream paradigm. This theoretical context has been employed to explain the nature of the relationship between executors and owners that define the strategic development of companies. Hussain, Rigoni, and Orij (2016) state that this approach to corporate governance addresses the peculiarities of the relationships between the board and managers.

This theory is grounded on the assumption that the financial performance of contemporary corporations is affected by the conflict between owners (principal) and top managers (agent). In this respect, the major role of boards is considered to be that of a controlling and monitoring body that ensures that the interests of shareholders will be met (Hassan, Marimuthu, & Johl, 2015). According to this theory, in corporations, principals and agents have different interests, which is the reason for numerous conflicts as well as ineffective governance and, as a result, poor performance.

It is believed that the tension between managers and owners leads to additional costs since the stakeholders have to structure the corresponding contracts and establish other ways to control managers and ensure their compliance with the set strategies. However, contracts have proved to be insufficiently effective due to various reasons including unforeseen circumstances or inability to develop comprehensive documents that would address all possible issues (Gaur et al., 2015).

Ownership concentration is often regarded as a tool to mitigate the negative effects of the conflict (that is inevitable according to the proponents of the theory) between principals and agents. High ownership concentration is associated with a positive impact on the firm’s performance as the power is dispersed among owners, so the conflicts related to the agency are minimal. Hassan et al. (2015) add that the demographic diversity of the board is another effective instrument aimed at controlling agents. Therefore, although the conflict is regarded as an indispensable part of corporations’ functioning, numerous strategies to minimize them have been developed.

Gaur et al. (2015) identify some issues related to this approach to governance. The scholars claim that additional costs associated with controlling and monitoring are often unnecessary as managers are not always guided by their self-interest. Moreover, numerous empirical studies suggest that managers concentrate on achieving the highest performance and remain committed to the established organizational goals (Gaur et al., 2015). As mentioned above, diversity of the board is associated with effective corporate governance making other controlling strategies a mere waste of funds and other resources (Gaur et al., 2015). These peculiarities are regarded as the limitations to the agency theory that are addressed in other theoretical frameworks.

Stewardship theory is an alternative paradigm that is based on the ideas opposite to the premises of the agency theory. According to stewardship theory, managers aim at improving companies’ performance as the success of the company is associated with their value as a professional (Rodriguez-Fernandez, 2016). It is believed that managers try to ensure the sustainable development of the firm to enhance their position in the labor market and justify (or claim) the increase in their earnings.

Therefore, monitoring and controlling are unnecessary and can be minimized, which leads to the reduction of costs and growing profits. The supporters of this theoretical framework argue that inside directors should constitute the majority of the board due to their interest in the company’s high performance. Moreover, inside directors tend to be aware of all the details related to the business or industry the firm is operating in. Gaur et al. (2015) also add that CEO duality has a positive impact on organizational performance due to strong leadership and proper goal alignment. This theoretical paradigm is associated with trust and unity that are critical to the success of organizations.

Nevertheless, these qualities make this approach vulnerable as well. Hassan et al. (2015) claim that due to the focus on trust, boards lose their controlling functions and become an advisory body that assists managers rather than monitors their activities. This kind of relationship can result in negative outcomes for corporations as boards will agree with all managers’ decisions without the necessary amount of criticism or doubt. This practice can lead to deteriorated performance and financial or reputational losses.

Another common theoretical paradigm employed to address corporate governance effectiveness is the resource dependency theory. According to this perspective, the board, as well as its structure and composition, is seen as a resource that adds value to the organization (Gaur et al., 2015). Hence, the structure of the board is often shaped so that the highest performance could be achieved. External board directors are believed to contribute to the sustainable development of companies due to their awareness of various external factors that may have an impact on the organization (Aguilera, Desender, Bednar, & Lee, 2015).

The rising popularity of this framework is closely related to the recent scandals that took place in the US corporate world when companies withheld important information and provided inadequate reports. External audit became one of the effective methods to avoid such violations and associated litigations. In terms of this approach, researchers often try to unravel the exact impact of external directors on firms’ performance.

Stakeholder theory implies the focus on a larger context as compared to other paradigms. Gaur et al. (2015) note that this perspective is a broader version of agency theory. According to stakeholder theory, companies should not concentrate on achieving some financial goals but have to contribute to the development of the community and become responsible corporate citizens (Chauhan & Chauhan, 2014). Corporations are encouraged and even forced to address the needs of different groups. This shift in the way corporate governance is viewed in society is due to the changes that have taken place (Ntongho, 2016).

Ducassy and Montandrau (2015) emphasized firms’ reputation that has an implicit effect on organizational performance and development. One of the considerable implications for companies is the belief that the board should include people about diverse groups. However, it is impossible to identify all stakeholders and include them in the board so this framework is hardly applicable in a real-life situation, but it is valuable in terms of research (Gaur et al., 2015). Scholars often utilize a combination of these theoretical contexts to explore the peculiarities of corporate governance.

Ownership Structure and Corporate Performance

The ownership structure of the board is regarded as one of the influential factors affecting organizational performance. As far back as the 1930s, American researchers tried to explore the nature of corporate governance and its influence on organizations’ performance. For example, Berle and Means (1932) stated that boards minimized the control of actual shareholders. The authors also identified adverse effects dispersed shareholders tended to have on companies’ performance. Modern researchers focus on such variables as ownership concentration and the type of ownership.

As far as ownership concentration research is concerned, it is commonly agreed that it has a positive influence on firms’ performance. Ke and Isaac (2007) analyzed Chinese property companies using the ordinary least square model and found a direct link between ownership concentration and organizational performance. Levy (1983) considered the way ownership concentration affected organizations’ stock prices and reported a positive correlation between the two variables.

The impact ownership concentration has on firms’ return has been examined in detail as well (Thomsen & Pedersen, 2000). The analysis of 435 biggest European organizations indicated that the high ownership concentration was associated with a high return on investment and the improvement of performance. Soufeljil, Sghaier, Kheireddine, and Zouhayer (2016) investigated ownership concentration influence on organizations’ ROA. The findings were consistent with the results of the studies mentioned above. Therefore, the correlation between ownership structure and organizations’ performance has been supported by sound evidence.

Xu and Jiang (2014) also addressed the issue and explored the link between ownership structure and the performance of over 1,400 Chinese listed companies. It was found that the concentration of ownership had a substantial effect on firms’ financial performance. Xu and Jiang (2014) emphasized that the concentration had to be balanced to be favorable for companies’ development. The decision-making power concentrated in the hands of a few shareholders often resulted in making wrong decisions. Whereas, shareholders’ equity concentration below 30% had negative effects since the decision-making was often lasting and counter-productive (Xu & Jiang, 2017). The findings have valuable implications for companies that can shape the structure of their boards and improve their effectiveness.

The difference between individual and institutional ownership has become a matter of academic inquiry. It is found that institutional ownership is positively linked to organizations’ value (Li, 2012). Li (2012) argues that companies’ value grows when institutional ownership increases, but the positive influence of this trend may be diminished if the level of individual ownership becomes high at a considerable pace. It is found that firms perform better when institutional shareholders prevail.

Claessens, Djankov, and Pohl (1997) explored the relationship between ownership concentration and voucher, as well as a secondary market, prices, and came to similar conclusions. The researchers note that the higher ownership concentration was the larger increase the prices saw. Claessens et al. (1997) stressed that indirect ownership concentration, despite some opposing views, proved to have considerable positive effects on companies’ performance.

The impact of total concentration and insider ownership on companies’ success has appeared in scholars’ lenses as well. Scholten (2014) observed the performance of 80 Dutch companies and analyzed the correlation between their ROA ratios and their ownership types. The quadratic effect of individual and total concentration ownership was apparent. In the case of total concentration ownership, companies’ performance was increasing until the concentration rate reached 48%, and then it started decreasing. Scholten (2014) notes that although a similar trend was identified with insider ownership, the findings cannot be generalized as only a limited number of firms had this ownership type. These findings indicate that balanced structures of boards are vital for firms’ proper financial performance.

Nevertheless, certain studies reveal the data that are inconsistent with the information mentioned above. For instance, Lemmon and Lins (2003) identified the relationships between ownership concentration and companies’ value during a financial crisis. The researchers based their findings on the analysis of 800 East Asian companies. Organizations operating in the period of a crisis are characterized by the expropriation of minority investors, which results in lower stock prices. Faccio and Lang (2002) also claimed that the effect of ownership concentration on performance was marginal in many companies depending on the country they operated in and their size.

The review of the literature concerning the link between ownership concentration and organizational performance suggests that there is a positive correlation between the two variables. Researchers address different aspects of ownership and companies’ performance, but the findings indicate that there is a well-pronounced relationship between ownership concentration and firms’ success. At the same time, it is clear that such variables as company size and the country of operation can interfere with the mentioned relationship. It can be necessary to dig deeper into the factors affecting organizations in different countries and diminishing the positive impact of ownership concentration on firms’ performance.

Board Size and Corporate Performance

One of the aspects of corporate governance that attracted significant attention in the academic world is the board size. A substantial bulk of empirical data suggests that the size of the board is one of the factors that have a considerable effect on companies’ performance although there is no single opinion on the matter among scholars. On the one hand, Kalsie and Shrivastav (2016) analyzed the performance of 154 organizations in 16 Indian sectors of the economy and emphasize a vivid correlation between corporate governance and board size. The number of members on the board often depends on the size of the organization. Large companies tend to have more members on their boards while small companies can have up to one member of the board.

It is believed that more people can control more areas and ensure the implementation of the decisions made in a more efficient way (Kalsie & Shrivastav, 2016). Badu and Appiah (2017) also claim that the size of the board has an impact on organizations’ performance as larger boards are more effective in monitoring and managing companies, which positively affects the performance of firms. Hence, it is possible to assume that the boards including more members are instrumental in achieving organizational goals and maintaining high performance.

On the other hand, it has been reported that the size of the boards negatively correlates with companies’ performance. For instance, Guest (2009) examined the functioning of 2,746 UK organizations between 1981 and 2002 and traced the negative effect of board size. The researcher argues that larger boards hurt their companies’ performance due to improper communication that hinders the effectiveness of decision-making. Excessive bureaucracy and overlap of various functions and responsibilities exhaust firms’ resources and even undermines the attainment of the established organizational goals (Guest, 2009).

Larger boards are often associated with lasting decision-making process due to the conflicting interests and approaches of the members of the board. Nazar and Rahim (2015) suggest that the board size is adversely associated with such performance indicators as ROE and ROA based on the analysis of 109 Sri Lankan organizations’ results in the 2013 fiscal year. The findings of these studies indicate that the more people boards include the poorer performance these companies are likely to display.

At the same time, some scholars find no connection between the size of the board and organizational performance. Isik and Riza Ince (2016) found no statistically significant link between the size of the board and the performance of Turkish banks. Although Moreno-Gómez, Lagos, and Gómez-Betancourt (2017) claim that the optimal board size for a Colombian company is between six and ten members, they also state that there is no statistically significant evidence to support this data.

Veklenko (2016) reports about a U-shaped relationship between ROA and the size of the board, but the link is rather slightly pronounced. According to Nguyen, Rahman, Tong, and Zhao (2015), the link between the board size and small companies’ performance is apparent, but this relationship is not found in large firms.

These findings suggest that there is still no exhaustive evidence regarding the correlation between board size and organizational performance. Companies operating in different industries and markets have been examined, but there is no single answer to the question. The peculiarities of countries, sectors of the economy, and other factors should be investigated as they can have an impact on the functioning and effectiveness of boards.

It is also quite unclear whether the effective methodology to address the issue is available. One of the relevant challenges is to identify whether the board size is more influential than its composition that can be instrumental in shaping companies’ performance. The size of the board can be completely unrelated to firms’ value as their performance can be affected by the strategic and operational flaws rather than the number of people on the board. Moreover, such aspects as increased bureaucracy, ineffective leadership, improper communication can undermine the functioning of the board and affect companies’ performance.

Diversity and Corporate Performance

Another aspect of corporate governance researched in detail is associated with the diversity of the board. It is noteworthy that there is no complete agreement on the positive influence of board diversity on organizational performance as different studies provide rather conflicting findings (Hollowell, 2007). Choi, Jeong, and Lee (2014) concentrate on the racial diversity of the board and its influence on firms’ value.

The researchers claim that diversity has a favorable impact on companies’ performance. For example, diversity strategies associated with such groups as Hispanics and Blacks are regarded as successful and leading to improved performance. This trend is not apparent with the Asian population. Moreover, the prevalence of male Asian managers on the board is linked to poor organizational performance. However, Choi et al. (2014) note that this longitudinal study is based on the analysis of one company, so the results can be specific to the firm under study exclusively.

Cultural diversity is often analyzed alongside other demographic peculiarities of the board. For example, Mazzotta, Bronzetti, and Baldini (2017) also report about the favorable influence of diversity on the performance of a firm. The researchers investigate the impact of gender and culture in the context of Italian companies. According to Mazzotta et al. (2017), gender has no statistically significant impact on organizational performance, but the presence of international directors on the board was associated with improved functioning and better outcomes. It is noteworthy the presence of interlocking international directors negatively correlated with organizations’ development.

At the same time the authors, conclude that diversity has a positive effect on companies’ performance. Hollowell (2007) also claims that diversity is beneficial for organizations as their performance improves and higher achievements are attained. The author provides valuable insights into the effects of diversity in the long-term perspective. It was found that the diversity of the board was associated with better performance in the long run. It is necessary to note that culture is not the only aspect that has been a matter of extensive research.

Some studies based on the analysis of the effects of gender diversity on firms’ functioning indicate that the relationship is apparent and positive. Woschkowiak (2018) provided quite similar results regarding cultural diversity but came to different conclusions as far as gender is concerned. The author investigated the relationship between gender, age, and cultural diversity and firms’ financial performance.

Top companies operating in the European market were under consideration, and the researcher hypothesized that the level of diversity had a direct link on the level of organizations’ success. Woschkowiak (2018) found an obvious relationship between diversity and companies’ ROA and Tobin’s Q. However, the researcher stressed that gender diversity had a clear and positive impact on organizational performance. Schneider (2017) found a positive correlation between gender and financial performance of companies based on the analysis of ROA. The opposing findings can be associated with different contexts and the differences in utilized methodology. Further research is necessary for this sphere, and the focus can be made on such factors a sage and education.

Lamers (2016) concentrated on the European market and examined the influence of gender diversity on companies’ performance. Also, the researcher attempted to identify the link between different demographic characteristics of female directors and organizational outcomes. It was reported that age, educational background, and ethnicity of women in boards had no statistically significant effect on the performance of the analyzed organization. Also, Lamers (2016) hypothesized that gender quotas could be favorable for companies, but no correlation was found in this respect. Therefore, it is assumed that quotas do not have any meaningful impact on companies’ functioning, and the overall diversity is associated with positive outcomes for organizations.

In both developed countries and emerging markets, the demographic diversity of boards is beneficial for the development of companies. Ararat, Aksu, and Tansel Cetin (2015) examined the influence of boards’ demographics on board monitoring, which was an important factor affecting organizations’ functioning. In the Turkish business context, boards’ diversity was associated with a decreased wedge onboard monitoring (Ararat et al., 2015). The inclination of dominant shareholders to expropriate was mitigated by the diversity of the board. The results of this study can have various implications especially regarding monitoring instruments that are commonly employed. The composition of the board can also be shaped to ensure the effectiveness of this body.

Apart from the diversity of the board per se, a diversity reputation has proved to affect companies’ performance (Roberson & Park, 2007). It is suggested that a diversity reputation has a positive influence on firms’ value, and the benefits associated with it are mainly derived from capital markets. An interesting observation sheds light on various effects diversity can have on organizational development. According to Roberson and Park (2007), the increase in the racial minority representation to a certain point (25%) leads to the decline of the company’s performance. However, when the representation of racial minorities goes beyond 25%, the organization’s financial performance improves.

As mentioned above, some studies provide evidence of the adverse effects boards’ diversity (or some of its aspects) has on the functioning of firms. For instance, Frijns, Dodd, and Cimerova (2016) evaluate the cultural distance between the members of the board and claim that cultural diversity can hinder the effectiveness of the board. The major tensions that tend to arise within boards are linked to the concepts of masculinity and individualism.

It is noteworthy that the negative influence is mitigated in the companies that operate internationally or have a culturally diverse workforce (Frijns et al., 2016). Therefore, cultural diversity is associated with some challenges to the effective functioning of boards and companies’ performance.

Another study providing evidence concerning the negative effects of diversity was implemented in the context of Nigerian quoted companies. Cultural diversity was found to have a positive effect on organizations’ outcomes (Ujunwa, Nwakoby, & Ugbam, 2012). Nevertheless, gender diversity tended to hurt the development of Nigerian publicly quoted firms. These findings are consistent with the data provided by Lamers (2016) who also examined quoted companies.

Notably, Ujunwa et al. (2012) suggest that the negative influence can be a result of inappropriate recruiting practices as female directors in the analyzed companies were employed due to their family links rather than experience and professionalism. Therefore, the relevance of the conclusions concerning gender diversity is rather doubtful as the adverse effects are linked to inappropriate recruitment methods and desire to adhere to quota policies rather than recruit high-profile female directors.

Schneider (2017) explored the effects of diversity on Brazilian companies’ financial performance based on the analysis of ROA. The researcher concentrated on several aspects of diversity including gender, age, and education. As mentioned above, Schneider (2017) reported about the positive correlation between gender and organizational performance. However, the findings also suggest that the diversity related to age and education is associated with adverse effects on the firm’s financial performance. Although some insights in this respect have been available, further research is needed regarding the effects of age and education of board members on companies’ development.

Summary

This literature review shows that scholars have developed various theoretical contexts and identified the correlation between different aspects of corporate governance, as well as effective strategies organizations, can employ. As far as the theoretical foundation of modern research is concerned, four major paradigms are utilized in academia. These approaches include agency, stewardship, stakeholders, and dependency theories.

These theories attempt to describe and explain the relationships between different stakeholders. The agency theory is the dominating perspective that is based on the belief that owners and managers are in constant conflict due to their focus on their interests. Irrespective of the chosen theoretical basis, scholars single out several aspects that have a considerable impact on companies’ performance. These domains include ownership structure, the board size, and the diversity of the board.

It has been found that the ownership structure has a direct influence on the performance of organizations. Scholars claim that ownership concentration should be balanced as when it is too high, it leads to expropriation when it is too low it often makes the decision-making process lasting and ineffective. It is also noteworthy that external factors (such as the country of origin or the start of a financial crisis) may interfere with the relationship between ownership structure and firms’ performance.

As far as board size is concerned, scholars’ views on the matter are quite different. It is possible to assume that numerous factors come into play and it can be hard to identify the perfect size of a company as all industries, markets, and countries have their peculiarities. The relevance of this methodology is another issue to address as companies’ performance can be shaped by the professionalism of the board members rather than their quantity.

Diversity is one of the aspects that have been investigated in detail, and certain agreement has been achieved. The vast majority of the reviewed sources conclude that board diversity is beneficial for companies’ performance in many settings although there can be situations when it should be managed properly. For instance, although gender diversity has proved to be favorable for the development of organizations, it is often associated with adverse effects in quoted firms. Cultural diversity has been regarded as beneficial for companies although it is quite important to make sure that the qualifications of board members are appropriate. Finally, it is reported that age diversity is related to negative effects.

It is necessary to note that although the research is rather extensive, it is still characterized by numerous gaps. For instance, Chinese corporate governance is still under-researched although some studies have explored certain aspects related to the influence of the peculiarities of boards on organizational performance. Special attention should be paid to the ways different stakeholders’ interests affect firms’ financial performance and their corporate governance. It can also be important to work on the development of sound methodologies that could be applied to the Chinese corporate context.

Annotated Bibliography: Primary Aspects Affecting Corporate Governance

Board of Directors and Corporate Governance
AuthorSampleCountryKey findings
The European Journal of Finance (2009)Examine the impact of board size on firm performance for a large sample of 2,746 UK listed firms over 1981-2002UKLarge firms are more likely to have large boards, are those firms for which the negative board size performance relation is the strongest.
Pascal Nguyen, Nahid Rahman, Alex Tong, Ruoyun Zhao (2015)The effect of board size on firm value in Australia. Using a large sample of Australian firms over the period 2001–2011.AustraliaIn Australian, the effect of board size is stronger in small firms, board size to have little impact on firm value for large firms.
Anjala Kalsie, Shikha Mittal Shrivastav (2016)The empirical literature by employing panel data analysis of 145 non-financial companies listed in the NSE CNX 200 Index of India corresponding to 16 industries to measure firm performance.IndiaThe board size has a positive and significant impact on the firm performance.
Mark S. Beasley (1996)The prediction that the inclusion of larger proportions of outside members on the board of directors significantly reduces the likelihood of financial statement fraud.As outside director ownership in the firm and outside director tenure on the board increase, and as the number of outside directorships in other firms held by outside directors decreases, the likelihood of financial statement fraud decreases.
Deyou Zhou (2006)Selects 115 private public listed enterprises as sample to analyse the board and the company performance by positive research china structure characters of board show insignificant relationChinaThe encouragement characters of the board show significant positive linear relationship, structure characters show insignificant relation and behaviour character shows significant negative relation.
Ebenezer Agyemang Badu, Kingsley Opoku Appiah (2017)Examines the impact of corporate board size on firm performance for a sample of 137 listed firms in Ghana and Nigeria.Ghana and NigeriaStatistically significant and positive relationship between board size and firm performance.
Jorge Moreno-Gómez, Diógenes Lagos Gonzalo Gómez-Betancourt (2017)The relationship between Board Size, Independent Members, and Number of Meetings of the Board of Directors and performance in Colombian firms during the 2008-2014 periodColombiaThere is no evidence to affirm that the relationship between the characteristics of the studied BD and economic performance is significant.
Karina Veklenko (2016)Use ROA, ROE and Tobin’s Q to analysis the relationship between composition of board of directors and firms’ performance.EuropeA slight indication for a U-shaped relationship between board size and ROA, and an inverted U-shaped relationship with ROE and Tobin’s Q.
Ozcan ISIK & Ali Riza INCE (2016)The impact of board size and board composition on performance for a sample of 30 commercial banks from 2008 to 2012 in Turkey.TurkeyBoard size has no significant relate effect on bank’s financial performance.
M.C.A.Nazar, Ruzita Abdul Rahim (2015)Examine the relationship between corporate board size and corporate performances of Sri Lankan listed companies.Sri LankaFirm size and dividend yield are significantly positively linked with ROA and ROE.
Diversity and Firm Performance
Quinetta M, Roberson Hyeon, Jeong Park, (2007)Use longitudinal data for 100 firms to test hypotheses related to the effects of diversity reputation and leader racial diversity on firm financial outcomes.There is a positive relationship between diversity reputation and book-to-market equity and a curvilinear, U-shaped relationship among leader diversity and revenues, net income, and book-to-market equity.
B. Paul Choi, Jin-Gil Jeong, Youngho Lee (2014)Using unique data for a thirteen-year period, this article examines the impact of diversity on firm performance based on six different levels of workforce for three different ethnic groups.Diversity strategy is successful at the two ethnic groups (Blacks and Hispanics)
Melsa Ararat, Mine Aksu, Ayse Tansel Cetin (2015)Using data from Turkey investigate the indirect effect of a board’s demographic diversity on firm performance via board monitoring in a context where boards are relatively homogeneous with respect to structural diversity.TurkeyThere is a positive and non-linear relationship between demographic diversity and performance, mediated by the board’s monitoring efforts.
Bart Frijns, Olga Dodd, Helena Cimerova (2016)Examine the impact of cultural diversity in boards of directors on firm performance.National cultural diversity in boards negatively affects firm performance measured by Tobin’s Q and ROA
Romilda Mazzotta Giovanni Bronzetti , Maria Assunta Baldini (2017)Examine the effect of diversity in the board of directors on the performance of the listed Italian financial institutions.ItalyFemale directors have no effect on firm performance. the overall demographic diversity on the board we observe that it is positively and significantly related to the performance of the financial firm.
Alina Woschkowiak (2018)This thesis examines the relationship between demographic diversity in the board of directors and the financial performance of European firms.EuropeThe findings reveal that overall demographic board diversity has a significant and positive effect on the financial performance of firms.
Else Lamers (2016)Research the relation between board diversity in the board of directors, and firm performance (e.g. return on assets) is examined.There is no positive relationship between board diversity in the board of directors, and firm performance.
Augustine Ujunwa, Ifeoma Nwakoby, Charles Ogechukwu Ugbam (2012)Investigates the impact of corporate board diversity on the financial performance of Nigerian quoted firms using a panel data of 122 quoted Nigerian firms.NigeriaGender diversity was negatively linked with firm performance, while board nationality and board ethnicity were positive in predicting firm performance.
Byron J. Hollowell (2007)Whether firms should be more diverse to enhances shareholder value.there is a positive and significant relationship between firm diversity and long-term firm performance.
Schneider Fernando (2017)This research investigates the relationship between the diversity on the composition of Board of Directors and the financial performance of Brazilian listed companies in BOVESPA, in a corporate segment called “Novo Mercado”.BrazilA more diverse board has positive impact in the financial performance, measured by Return over Assets.
Ownership Structure and Corporate Performance
Berle, A. G. Means, (1932)Analyses the actual practice and implications of joint stock method of organization US.USInverse relation between dispersed shareholders and firm performance.
Ying Li (2012)Examine the relationship between insider ownership and corporate performance institutional.Ownership has consistent and significant relationship with firm value, while the relationship between individual ownership and firm value is not significant.
Marinke Scholten (2014)Investigate effect of total ownership concentration and insider ownership concentration on two measures of firm performance.Netherlands>With a data sample of two annual observations of 2011 and 2012 at 80 Dutch listed companies, significant empirical evidence is found for a quadratic effect of total ownership concentration on firm performance measured by the ROA-ratio.
Qiulin Ke (2007)Investigates the relationship of ownership structure and corporate performance of China’s listed property companies.ChinaOwnership concentration has a positive association with corporate performance.
Levy (1983)The value of the vote to the degree of concentration of control in the A shares.There is a positive correlation between the stock price and the concentration of ownership in US companies.
Claessens(1997)Analysis of Czech company profitability.CzechVoucher prices and following secondary market prices are shown to depend upon the resulting ownership structures. The more concentrated ownership is, the higher prices are.
Torben Pedersen, Steen Thomsen (2000)Examines the relationship between ownership structure and value of the largest European firms.EuropeThe company’s ownership concentration is positively correlated with the company’s return.
Mara Faccio, Larry H.P Lang (2002)Analyze the ultimate ownership and control of 5,232 corporations in 13 Western European countries.Western EuropeThe higher the concentration of ownership, The greater the negative effect of firm performance
Soufeljil M, Sghaier, A, Kheireddine, H. (2016)The effect of the ownership structure of 51 Tunisian companies listed on the stock exchange of Tunis with data on the performance of the company.The existence of a positive impact and statistically significant concentration of ownership, on the performance of the company measured by the ROA.
Xu and Jiang (2014)The relationship between the concentration of equity and corporate performance.Chinathe concentration had to be balanced to be favourable for companies’ financial performance
Michael L. Lemmon, Karl V. Lins (2003)Effect of ownership structure on value during the region’s financial crisis.A listed company controlled by a large shareholder whose company value is significantly higher than other companies with the same conditions.

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