Board Characteristics and Firm Performance: Evidence from the Listed Non-Banking Financial Institutions of Bangladesh

Document Type : Original Research


Department of Business Administration, University of Asia Pacific, Dhaka, Bangladesh


The main objective of this study is to find out the effects of board characteristics on firm performance in the listed companies of non-banking financial institutions industry of Bangladesh. This study has considered five board characteristics namely board size, the proportion of independent directors, the proportion of female directors, the number of board meetings and percentage of directors’ ownership. ROA has been taken as the performance indicator. The regression results show that board size and female directors are positively and significantly related to firm performance. On the other hand the proportion of independent directors, the number of board meetings and the percentage of directors’ ownership do not have any significant impact on firm performance. The findings of this study will help the regulators and policymakers to understand the existing weakness of corporate governance structure in the financial institution industry and will aid in their quest for harmonizing the practice of corporate governance of Bangladesh with that of developed countries.


Main Subjects

Abbas, A., Naqvi, H. A., & Mirza, H. H. (2013). Impact of Large Ownership on Firm Performance: A Case of Non-Financial Listed Companies of Pakistan. World Applied Sciences Journal, 21(8), 1141-1152.
Al-Daoud, K. I., Saidin, S. Z., & Abidin, S. (2016). Board meeting and firm performance: Evidence from the Amman stock exchange. Corporate Board: role, duties and composition, 12(2), 6-11.
Al-Matari, E. M., Al-Siwidi, A. K., Fadzil, F. B., & Al-Matari, Y. B. (2012). The Impact of board characteristics on Firm Performance: Evidence from Nonfinancial Listed Companies in Kuwaiti Stock Exchange. International Journal of Accounting and Financial Reporting, 2(2), 312-332.
Amer, M., Ragab, A., & Ragheb, M. (2014). Board Characteristics and Firm Performance: Evidence from Egypt. 6th Annual American Business Research Conference, (pp. 0-25). New York.
Bear, S., Rahman, N., & Post, C. (2010). The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics, 97(2), 207-221.
Berle, A. A., & Means, G. C. (1932). The Modern Corporation and Private Property. New York : Macmillan.
Bhabra, H. S., & Li, T. (2011). Independent Directors and Corporate Performance: Evidence from Listed Firms in China. Corporate Ownership & Control, 8(3), 145-169.
Bowerman, B. L., & O'Connell, R. T. (1990). Linear statistical models: An applied approach. Boston PWS-Kent Pub. Co: PWS-Kent Pub. Co.
Boyle, G., & Ji, X. (2013). New Zealand corporate boards in transition. Pacific Accounting Review, 25(3), 235-258.
Brennan, N. (2006). Boards of Directors and Firm Performance: Is There an Expectations Gap? Corporate Governance: An International Review, 14(6), 577-593.
Brown, P., Beekes, W., & Verhoven, P. (2011). Corporate Governance, Accounting and Finance: A Review. Accounting and Finance, 51(1), 96-172. doi:10.1111/j.1467-629X.2010.00385.x
Dalton, D. R., & Daily, C. M. (1999). What’s wrong with having friends on the board. Across the Board, 36(3), 28-32.
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-325.
Fauzi, F., & Locke, S. (2012). Board Structure, Ownership Structure and Firm Performance: A Study of New Zealand Listed-Firms. Asian Academy of Management Journal of Accounting and Finance, 43-67.
Finkelstein, S., & Hambrick, D. C. (1996). Strategic Leadership: Top Executives and Their Effects on Organization. Minneapolis St. Paul: West Publishing Company .
Guest, P. M. (2009). The impact of board size on firm performance: evidence from the UK. The European Journal of Finance, 15(4), 385-404.
Hanh, L. M., Ting, I. K., Kweh, Q. L., & Hoanh, L. H. (2018). Board Meeting Frequency and Financial Performance: A Case of Listed Firms in Vietnam. International Journal of Business and Society, 19(2), 464-472.
Haniffa, R. M., & Cooke, T. E. (2002). Culture, Corporate Governance and Disclosure in Malaysian Corporations. Abacus, 38, 317-349.
Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Corporate Governance Structure and Performance of Malaysian Listed Companies., 33, 1034-1062.
Hermalin, B. E., & Weisbach, M. S. (2003). Board of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature. Economic Policy Review, 9(1), 7-26.
Hillman, A., Shropshire, C., & Cannella, J. (2007). Organizational predictors of women on corporate boards. The Academy of Management Journal, 50(4), 941-952.
Jensen, M. C., & Meckling, W. (1976). Theory of the firm: managerial behavior, agency cost and ownership structure. Journal of Financial Economics, 3, 305-360.
Kiel, G. C., & Nicholson, G. J. (2003). Board Composition and Corporate Performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance. The International Journal of Business in Society, 11(3), 189-205.
Kutum, I. (2015). Board Characteristics and Firm Performance: Evidence from Palestine. European Journal of Accounting Auditing and Finance Research, 3(3), 32-47.
Lorsch, J., & Maclver, E. (1989). Pawns or Potentates: The Reality of America’s Corporate Boards. Harvard Business School Press Review, 15, 369-381.
Masum, M. H., & Khan, M. M. (2019). Impacts of Board Characteristics on Corporate Performance: Evidence from Bangladeshi Listed Companies. International Business and Accounting Research Journal, 3(1), 47-57.
Muttakin, M. B., Khan, A., & Subramaniam, N. (2012). Board structure and firm performance: Evidence from an emerging economy. AT Business Management Review, 8(2), 97-108.
Neter, J., Wasserman, W., & Kutner, M. H. (1989). Applied Linear Regression Models. Homewood: Richard D. Irwin, Inc.
Nguyen, T., Evans, E., & Lu, M. (2017). Independent directors, ownership concentration and firm performance in listed companies. Pacific Accounting Review, 29(2), 204-226.
Nicholson, G., & Kiel, G. (2007). Can Directors Impact Performance? A Case Based Test of Three Theories of Corporate Governance. Corporate Governance: An International Review, 15(4), 585-608.
Paul, J. (2017). Board Activity and Firm Performance. Indian Journal of Corporate Governance, 10(1), 44-57.
Pfeffer, J. (1973). Size, Composition, and Function of Hospital Boards of Directors: A Study of Organization-Environment Linkage. Administrative Science Quarterly, 18, 349-364.
Qadorah, A. M., & Fadzil, F. B. (2018). The Effect of Board Independence and Board Meeting on Firm Performance: Evidence from Jordan. Journal of Finance and Accounting, 6(5), 105-109.
Rahman, M. M. (2016). Determinants of CEO Compensation: Empirical Evidence from Listed Banks of Bangladesh. Dhaka University Journal of Business Studies, 1(1), 127-161.
Rahman, M. M., & Saima, F. N. (2018). Efficiency of Board Composition on Firm Performance: Empirical Evidence from listed Manufacturing Firms of Bangladesh. Journal of Asian Finance, Economics and Business, 5(2), 53-61.
Ramdani, D., & Witteloostuijn, A. V. (2010). The impact of board independence and CEO duality on firm performance: A quantile regression analysis for Indonesia, Malaysia, South Korea and Thailand. British Journal of Management, 21(3), 607-627.
Rashid, A. (2018). Board independence and firm performance: Evidence from Bangladesh. Future Business Journal, 4(1), 34-49.
Rashid, A., De Zoysa, A., Lodh, S., & Rudkin, K. (2010). Board Composition and Firm Performance: Evidence from Bangladesh. Australasian Accounting, Business and Finance Journal, 4(1), 76-95.
Robinson, G., & Dechant, K. (1997). Building a business case for diversity. Academy of Management Executive, 11, 21-30.
Ronen, J., & Yaari, V. (2008). Earnings management: emerging insights in theory, practice, and research. New York: Springer.
Rose, C. (2005). The Composition of Semi-Two Tier Corporate Boards and Firm Performance. . Corporate Governance: An International Review, 13(5), 691-701.
Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Corporate Governance: International Review, 15, 404-413.
Rouf, M. A. (2011). The Relationship between Corporate Governance and Value of the Firm in Developing Countries: Evidence from Bangladesh. The International Journal of Applied Economics and Finance, 5(3), 237-244.
Samaha, K., Dahawy, K., Hussainey, K., & Stapleton, P. (2012). The extent of corporate governance disclosure and its determinants in a developing market: The case of Egypt. Advances in Accounting , 28(1), 168-178. doi: 10.1016/j.adiac.2011.12.001
Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2500 Danish firms. International Journal of Productivity and Performance Management, 55(7), 569-593.
Wu, Y. (2004). The impact of public opinion on board structure changes, director career progression, and CEO turnover: Evidence from CalPERS’ corporate governance program. Journal of Corporate Finance, 10, 199-227.
Yasser, Q. R. (2012). Affects of female directors on firms performance in Pakistan. Modern Economy, 3, 817-825.
Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185-211.
Zahra, S. A., & Pearce II, J. A. (1989). Board of Directors and Corporate Financial Performance: A Review and Integrative Model. Journal of Management, 15(2), 291-334.