Impact of the board of directors’ characteristics on firm performance: A case of Bahraini listed firms

  • 746 Views
  • 260 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

This study aims to examine the impact of the characteristics of the board of directors (BOD), namely board independence, board size, frequency of board meetings, and board gender diversity, on firm performance. This quantitative study uses data from all firms listed in the Bahrain Bourse for 2019 and 2020. Data on BODs were taken from the companies’ governance reports, while data on firm performance, namely return on assets (ROA), return on equity (ROE), and earnings per share (EPS), were taken from annual reports. Based on the ordinary least squares (OLS) approach, the results show insignificant relationships between BOD characteristics and firm performance. Board independence, size, frequency of meetings, and gender diversity insignificantly enhance Bahraini firms’ performance. The results indicate that firms may need to effectively implement BOD mechanisms. Moreover, other factors may moderate the impact of BOD mechanisms on firm performance. Hence, the study suggests a need for more regulations and policies to increase the effectiveness of board members. This study alerts policymakers, firms’ shareholders and stakeholders, and researchers to the need to increase directors’ roles in boosting company performance, especially in developing countries, where it is complicated to force business to follow best governance practices.

view full abstract hide full abstract
    • Table 1. Descriptive statistics for the type of industry
    • Table 2. Summary of the operationalization of the variables
    • Table 3. Descriptive statistics for dependent variables
    • Table 4. Descriptive statistics for dummy control variables
    • Table 5. Descriptive statistics of skewness and kurtosis
    • Table 6. Correlations matrix of study variables
    • Table 7. OLS regression for the three models
    • Table 8. Hypotheses testing results
    • Conceptualization
      Mujeeb Al-Absy
    • Formal Analysis
      Mujeeb Al-Absy
    • Funding acquisition
      Mujeeb Al-Absy
    • Investigation
      Mujeeb Al-Absy, Mustafa Hasan
    • Methodology
      Mujeeb Al-Absy, Mustafa Hasan
    • Project administration
      Mujeeb Al-Absy
    • Resources
      Mujeeb Al-Absy
    • Software
      Mujeeb Al-Absy
    • Supervision
      Mujeeb Al-Absy
    • Writing – original draft
      Mujeeb Al-Absy
    • Data curation
      Mustafa Hasan
    • Writing – review & editing
      Mustafa Hasan