Relation between board composition and firm performance: Empirical evidence from Nordics

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Journal Title
Journal ISSN
Volume Title
School of Business | Bachelor's thesis
Date
2019
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
24+4
Series
Abstract
I study the relationship between the composition of board of directors and company performance on two measures: Tobin’s Q and ROA. Using a panel data sample of more than 400 Finnish, Danish and Swedish companies over the years 2012-2018, I employ pooled OLS estimator and fixed effects regressions using firm and year fixed effects. I find significant evidence supporting my hypothesis that board size has a negative correlation with firm performance, measured with Tobin’s Q. On the contrary, I find only a little significance between board size and ROA. I also find a weak significant relation between the number of foreign directors and firm value. These findings are robust to foreseeable covariates, multicollinearity, heteroscedasticity, and omitted variables. These results contribute to the existing literature on corporate governance by providing robust evidence on a unique data set of Nordic countries in post-financial crisis markets.
Description
Thesis advisor
Ungeheuer, Michael
Keywords
board of directors, board composition, board size, foreign directors, corporate governance, firm performance
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Citation