Board size affects firm performance.docx

1、Board size affects firm performanceBoard size affects firm performanceContent 1.0 Abstract 12.0 Introduction 13.0 Literature review 34.0 Data and Methodology 65.0 Results and Analysis 95.1 Descriptive statistical analysis of board size 95.1.1 Descriptive statistical analysis of board size 95.1.2 Des

2、criptive statistical analysis of independent directors 115.2 Descriptive statistical analysis of firm performance 145.2.1 Descriptive statistical analysis of Yr End Market Cap 145.2.2 Descriptive statistical analysis of Tobins Q 145.3 The correlation analysis 155.3.1 The correlation analysis of the

3、relation between the number of board members and firm performance 155.3.2 The correlation analysis of the relation between the number of independent directors and firm performance 175.4 Regression analysis 205.4.1 Regression analysis of the number of board remembers and firm performance 205.4.2 Regr

4、ession analysis of the number of independent directors and firm performance 286.0 conclusion and the future work 326.1 Conclusion 326.2 The future research 33Reference 34Board size affects firm performance1.0 AbstractOne of the primary responsibilities of a board of directors is to assess management

5、 practices and to make sure that the CEO is consistent with the interests of shareholders. Board is the core of corporate governance structure，and the efficiency of board governance will be reflected through company performance This paper takes the top 100 America companies as research samples to in

6、vestigate the relationship between board characteristics and enterprise performance based on SPSS statistical software and related theories toolsThe results from our study show that: First，as the size of board and enterprise performance is not positive related，expanding the size of board appropriate

7、ly will reduce enterprise performance Second，the proportions of independent directors and the proportion of directors among shareholders are both positively correlated with corporate performance. 2.0 Introduction This paper pays attentions to the analysis of the relationship between board size and t

8、he firm performance. Board of director is the core component of the internal Corporate Governance, and it is an important decision-making and supervision organization. The function of board of director is very important in corporate governance, and establishing a reasonable and effective board is th

9、e key to building a modern Corporate Governance. It is the concern of domestic and abroad scholars and corporate governance organization that if board structure influences corporate performance, and there is not a unified conclusion on this subject yet. This paper firstly carries on the survey to th

10、e domestic and international research document of the relationship between board structure and corporate performance, and then carries on theoretical research and empirical analysis to the relationship between board structure and corporate performance on the basis of the research in existence.Based

11、on the related theories this paper defines the variables of board size and structure and the firm performance, which are basic elements of the deep analysis process in the after part of this paper. And the empirical research is finished by the SPSS statistical software, in which the relationship is

12、analyzed and 100 America companies are regarded as research samples. This paper examines the relationship between board character and corporate performance including board size, proportion of independent director, board leadership and board shareholdings. Through the descriptive analysis to the boar

13、d characterize, board size of samples companies in America has the downward trend; the proportion of independent directors has been increasing year by year; most companies choose the leadership structure of general manager served as director or assistant chairman of board of director; the average am

14、ount of director shareholding has the increasing trend, but the average ratio of board shareholding is still low. Through the regression analysis, we find that board size has the inverted U-curve relationship with corporate, the proportion of independent director have no significant correlation with

15、 corporate performance, duality of general manager and chairman of board is positively correlated with corporate performance, and the ratio of director shareholding is positively correlated with corporate performance, but the correlation didnt pass the statistical inspection.And the literature revie

16、w in the first part of this paper is finished, which mainly analyze the relationship between board size ands structure and firm performance that is researched in different literatures. The second section is samples data collection and methodology, which will do an especial and detailed explanation o

17、n research hypotheses, data source, and the choice of variables about board size and firm performance etc. the third section is the results and empirical analysis of samples data through the SPSS statistical software that main including Descriptive statistical analysis and regression analysis and co

18、rrelation analysis. And the final part of the main research body is conclusion section, which main includes summary of findings, weaknesses of this paper, and possible future research.3.0 Literature review Mohamed Belkhir (2009) considers that Contrary to theories predicting that smaller boards of d

19、irectors are more effective, increasing the number of directors in banking rms does not undermine performance. In contrast, the evidence is in favor of a positive relationship between board size and performance, as measured by Tobins Q and the return on assets. The paper investigates whether this po

20、sitive association is due to the fact that banks reduce the number of their directors in the aftermath of poor performance by testing for the relationship between board size and performance. The ndings show that the number of directors leaving the board and the number of those joining the board for

21、the rst time increase following a poor performance, but the net change in board size is not affected by past performance.Indra Abeysekera (2010) in his paper explores the effects of the size of the board of directors andboard involvement in strategy on nancial performance in the private club industr

22、y. And his papers results showed that board members involvement in strategy and the size of the board of directors have a positive inuence on a private clubs nancial performance.Sandra Maria Geraldes Alves (2011) extends previous research by examining empirically how board structure affects the magn

23、itude of earnings management for companies listed in Portugal. In particular, the paper focuses on the main characteristics of the board structure that are highlighted by the Portuguese Securities Market Supervisory Authority recommendations, i.e. board size, board composition and boards monitoring

24、committees. His research results support the predicted non-linear relationship between board size and earnings management. It is also found that discretionary accruals are negatively related to board composition. However, no evidence is found that the existence of an audit committee affects the leve

25、ls of earnings management.Prior research has investigated determinants of CEO compensation. However, that research has been primarily limited to large firms. C. Joe Ueng, Donald W. Wells, Juliana D. Lilly (2000) in their study investigates the impact of CEO influence over the board of directors on C

26、EO pay for both large and small firms. Additionally, other determinants of CEO pay for both large and small firms are examined. Results suggest that CEO influence over the board significantly affects CEO pay for large firms. However, we do not find the same evidence for small firms. Firm size is the

27、 primary factor of CEO pay for small firms. Evidence in this study suggests that CEO pay of large firms is mostly a function of CEO influence over the board, firm size, and firm performance.Michael Bradbury, Y T Mak, S M Tan (2006) examines the relation between governance (as measured by board and a

28、udit committee characteristics) and accounting quality (as measured by abnormal accruals) in a setting where there is no a priori reason to suspect systematic management of earnings. Using data from Singapore and Malaysia, we find both board size and audit committee independence is related to lower

29、abnormal working capital accruals. Furthermore, the relation between audit committee independence and higher quality accounting exists only when the abnormal accruals are income increasing. This suggests that audit committees are effective in the nancial reporting process by reducing the level of in

30、come increasing abnormal accruals. The results also indicate that audit committees are effective only when all members are independent directors.Parichart Rachpradit, John C.S. Tang, Do Ba Khang (2012) in their paper nds that both ownership and board structure have effects on the relationship betwee

31、n CEO turnover and rm performance. The probability of CEO turnover is lower when the rm is controlled by family, the CEO is part of the controlling family, and board size is larger. Contrary to previous studies, sensitivity of CEO turnover to rm performance is higher with the presence of CEO duality

32、 and lower degree of board independence. When a CEO continues to work beyond retirement age, the probability of turnover is not associated with frims performance.Seoki Lee, Qu Xiao (2011) in their paper to performs a pooled regression analysis to examine the proposed relationship. The sampled compan

33、ies are from the period 1990-2008, consisting of 281 and 1,406 observations for the hotel and restaurant industries, respectively. The study additionally performs the analysis for the 1990s and the 2000s separately for a comparison purpose. And their ndings support the U-shaped relationship between ca