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Ownership Structure, Board Composition and Investment Performance

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Author Info
Eklund, Johan (RATIO and Jönköping International Business School)
Palmberg, Johanna () (Jönköping International Business School)
Wiberg, Daniel (Jönköping International Business School and CESIS Royal Institute of Technology)

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Abstract

In this paper the relation between ownership structure, board composition and firm performance is explored. A panel of Swedish listed firms is used to investigate how board composition affects firm performance. Board heterogeneity is measured as board size, age and gender diversity. The results show that Swedish board of directors have become more diversified in terms of gender. Also, fewer firms have the CEO on the board which can be interpreted as a sign of increased independency. The regression analysis shows that gender diversity has a small but negative effect on investment performance, and the same holds for CEO being on the board. The analysis also show that board size has a significant negative effect on investment performance. When incorporating all the explanatory variables into one equation however, the negative effect of larger boards dilutes the effect of gender diversity and having the CEO on the board.

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Publisher Info
Paper provided by The Ratio Institute in its series Ratio Working Papers with number 129.

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Length: 26 pages
Date of creation: 13 Feb 2009
Date of revision:
Handle: RePEc:hhs:ratioi:0129

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Related research
Keywords: Corporate governance; board composition; investments performance; marginal q;

Other versions of this item:

Find related papers by JEL classification:
G30 - Financial Economics - - Corporate Finance and Governance - - - General
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gugler, Klaus & Mueller, Dennis C & Yurtoglu, B Burcin, 2004. "Corporate Governance and the Returns on Investment," Journal of Law & Economics, University of Chicago Press, vol. 47(2), pages 589-633, October.
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  3. Coles, Jeffrey L. & Daniel, Naveen D. & Naveen, Lalitha, 2008. "Boards: Does one size fit all," Journal of Financial Economics, Elsevier, vol. 87(2), pages 329-356, February. [Downloadable!] (restricted)
  4. Per-Olof Bjuggren & Johan Eklund & Daniel Wiberg, 2007. "Ownership structure, control and firm performance: the effects of vote-differentiated shares," Applied Financial Economics, Taylor and Francis Journals, vol. 17(16), pages 1323-1334. [Downloadable!] (restricted)
    Other versions:
  5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October. [Downloadable!] (restricted)
  6. Gugler, Klaus & Yurtoglu, Burcin B., 2003. "Average q, marginal q, and the relation between ownership and performance," Economics Letters, Elsevier, vol. 78(3), pages 379-384, March. [Downloadable!] (restricted)
  7. C. B. Ingley & N. T. Van der Walt, 2001. "The Strategic Board: the changing role of directors in developing and maintaining corporate capability," Corporate Governance: An International Review, Blackwell Publishing, vol. 9(3), pages 174-185, 07. [Downloadable!] (restricted)
  8. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law & Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
  9. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May. [Downloadable!] (restricted)
  10. John, Kose & Senbet, Lemma W., 1998. "Corporate governance and board effectiveness1," Journal of Banking & Finance, Elsevier, vol. 22(4), pages 371-403, May. [Downloadable!] (restricted)
  11. Nicholas Walt & Coral Ingley, 2003. "Board Dynamics and the Influence of Professional Background, Gender and Ethnic Diversity of Directors," Corporate Governance: An International Review, Blackwell Publishing, vol. 11(3), pages 218-234, 07. [Downloadable!] (restricted)
  12. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July. [Downloadable!] (restricted)
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  13. David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, 02. [Downloadable!] (restricted)
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