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Boards of Directors and Firm Performance: is there an expectations gap?

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  • Niamh Brennan

Abstract

Reflecting investor expectations, most prior corporate governance research attempts to find a relationship between boards of directors and firm performance. This paper critically examines the premise on which this research is based. An expectations gap approach is applied for the first time to implicit expectations which assume a relationship between firm performance and company boards. An expectations gap has two elements: a reasonableness gap and a performance gap. Seven aspects of boards are identified as leading to a reasonableness gap. Five aspects of boards are identified as leading to a performance gap. The paper concludes by suggesting avenues for empirically testing some of the concepts discussed in this paper. Copyright (c) 2006 The Author; Journal compilation (c) 2006 Blackwell Publishing Ltd.

Suggested Citation

  • Niamh Brennan, 2006. "Boards of Directors and Firm Performance: is there an expectations gap?," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(6), pages 577-593, November.
  • Handle: RePEc:bla:corgov:v:14:y:2006:i:6:p:577-593
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    References listed on IDEAS

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    Cited by:

    1. Ogege Samson & Boloupremo Tarila, 2014. "Corporate Governance and Financial Performance of Banks: Evidence from Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, pages 44-58.
    2. Hsien-Chang Kuo & Lie-Huey Wang & Hui-Wen Liu, 2012. "Corporate Governance and Capital Structure:Evidence from Taiwan SMEs," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 43-58, August.
    3. Afzalur Rashid, 2013. "CEO duality and agency cost: evidence from Bangladesh," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(4), pages 989-1008, November.
    4. Robert Lewis & Gary O’Donovan & Roger Willett, 2017. "The Effect of Environmental Activism on the Long-run Market Value of a Company: A Case Study," Journal of Business Ethics, Springer, pages 455-476.
    5. Eric M. Bosire & Vincent O. Ongore, 2015. "Effects of Board Composition on Financial Performance: Empirical Analysis of Companies Listed at the Nairobi Securities Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 23-43.
    6. repec:eee:worbus:v:52:y:2017:i:5:p:615-627 is not listed on IDEAS
    7. Niamh M. Brennan & Collette E. Kirwan, 2015. "Audit committees: practices, practitioners and praxis of governance," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 28(4), pages 466-493, May.
    8. Niamh M. Brennan & Collette E. Kirwan & John Redmond, 2016. "Accountability processes in boardrooms: A conceptual model of manager-non-executive director information asymmetry," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 29(1), pages 135-164, January.
    9. repec:kap:jbuset:v:142:y:2017:i:2:d:10.1007_s10551-015-2752-8 is not listed on IDEAS
    10. Niamh M. Brennan & Jill Solomon, 2008. "Corporate governance, accountability and mechanisms of accountability: an overview," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 21(7), pages 885-906, September.
    11. Aila Virtanen, 2012. "Women on the boards of listed companies: Evidence from Finland," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 571-593, November.
    12. Niamh Brennan, 2010. "A review of corporate governance research : an Irish perspective," Open Access publications 10197/2962, Research Repository, University College Dublin.
    13. Afzalur Rashid, 2015. "Revisiting Agency Theory: Evidence of Board Independence and Agency Cost from Bangladesh," Journal of Business Ethics, Springer, pages 181-198.
    14. Ogege Samson & Boloupremo Tarila, 2014. "Corporate Governance and Financial Performance of Banks: Evidence from Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, pages 216-230.
    15. repec:rss:jnljef:v4i2p3 is not listed on IDEAS
    16. Holm, Claus & Schøler, Finn, 2008. "Reduction of Asymmetric Information through Corporate Governance Mechanisms : The Importance of Ownership Dispersion and International," Accounting Research Center Working Papers A-2008-02, University of Aarhus, Aarhus School of Business, Department of Business Studies.
    17. Aila VIRTANEN & Tuomo TAKALA 1University of Jyväskylä, School of Business and Economics, University of Jyväskylä,, 2016. "Accountability Of Corporate Boards In Finland," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 8(1), pages 5-24, March.

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