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Board Characteristics and Corporate Performance in the Netherlands

Author

Listed:
  • Hans van Ees

    (Faculty of Economics, University of Groningen)

  • Theo J.B.M. Postma

    (University of Groningen)

  • Elmer Sterken

    (University of Groningen)

Abstract

We analyze the performance-board characteristic nexus of Dutch listed firms. The Netherlands has a continental-European two-tier board structure. This makes it interesting to analyze the impact of management and supervisory board characteristics (size, composition and remuneration) on corporate performance. In Dutch corporate governance, the supervisory board plays a role in (anti-) investor protection. Subsequently, both board size and composition are variables that reflect corporate decision-making. In order to deal with this endogeneity problem, we use governance indicators such as (anti-) investor protection to endogenize board variables. Our results reveal that the size of the management board is not affecting corporate performance. We find support for a negative relationship between the supervisory board size and firm performance. Moreover, we observe a negative relationship between the proportion of supervisory board members with network ties to other organizations and performance.

Suggested Citation

  • Hans van Ees & Theo J.B.M. Postma & Elmer Sterken, 2003. "Board Characteristics and Corporate Performance in the Netherlands," Eastern Economic Journal, Eastern Economic Association, vol. 29(1), pages 41-58, Winter.
    • Handle: RePEc:eej:eeconj:v:29:y:2003:i:1:p:41-58
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    References listed on IDEAS

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    3. Joni, Joni & Ahmed, Kamran & Hamilton, Jane, 2020. "Politically connected boards, family and business group affiliations, and cost of capital: Evidence from Indonesia," The British Accounting Review, Elsevier, vol. 52(3).
    4. Kees Van Veen & Janine Elbertsen, 2008. "Governance Regimes and Nationality Diversity in Corporate Boards: A Comparative Study of Germany, the Netherlands and the United Kingdom," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 386-399, September.
    5. Ichiro Iwasaki, 2013. "Firm-Level Determinants of Board System Choice: Evidence from Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(4), pages 636-671, December.
    6. Wei-Kang Wang & Wen-Min Lu & Qian Long Kweh & Mohammad Nourani & Rong-Suei Hong, 2021. "Interlocking directorates and dynamic corporate performance: the roles of centrality, structural holes and number of connections in social networks," Review of Managerial Science, Springer, vol. 15(2), pages 437-457, February.
    7. Iwasaki, Ichiro, 2008. "The determinants of board composition in a transforming economy: Evidence from Russia," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 532-549, December.
    8. Julia Prömpeler & Dennis B. Veltrop & Janka I. Stoker & Floor A. Rink, 2023. "Striving for sustainable development at the top: Exploring the interplay of director and CEO values on environmental sustainability focus," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 5068-5082, November.
    9. Luigi Lepore & Francesco Paolone & Domenico Rocco Cambrea, 2018. "Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(4), pages 829-862, December.
    10. Mariëlle C. Non & Philip Hans Franses, 2007. "Interlocking Boards and Firm Performance: Evidence from a New Panel Database," Tinbergen Institute Discussion Papers 07-034/2, Tinbergen Institute.
    11. Iwasaki, Ichiro, 2011. "Executive Board: The Russian Experience," RRC Working Paper Series 32, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    12. Rogers A. Akinsokeji, 2018. "Impact Of Board Structure On Firm Performance In The Nigerian Manufacturing Sector," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 3(1), pages 56-65, March.
    13. Apu Manna & Tarak Nath Sahu & Krishna Dayal Pandey, 2020. "Board size, multiple directorship and performance of Indian listed firms," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 19(2), pages 111-129.
    14. Berezinets Irina & Ilina Yulia & Muravyev Alexander, 2011. "Owners, Boards, Managers and the Private Benefits of Control: A Study of Dual Class Stock Firms in an Emerging Market," EERC Working Paper Series 11/12e, EERC Research Network, Russia and CIS.
    15. Helen Hu & On Tam & Monica Tan, 2010. "Internal governance mechanisms and firm performance in China," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 727-749, December.
    16. Iwasaki, Ichiro & 岩﨑, 一郎 & イワサキ, イチロウ, 2007. "Endogenous board formation and its determinants in a transition economy: evidence from Russia," CEI Working Paper Series 2007-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    17. Berezinets, Irina & Ilina, Yulia & Muravyev, Alexander, 2011. "CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange," IZA Discussion Papers 6256, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Corporate Governance; Firm; Firms; Governance; Management;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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