IDEAS home Printed from https://ideas.repec.org/a/gam/jadmsc/v15y2025i7p247-d1688193.html

Board Size and Financial Performance as a Driver for Social Innovation: Evidence from Italian Local State-Owned Enterprises

Author

Listed:
  • Cristina Cersosimo

    (Dipartimento di Scienze Aziendali e Giuridiche, University of Calabria, 87036 Rende, Italy)

  • Nathalie Colasanti

    (Dipartimento di Scienze Giuridiche ed Economiche, Unitelma Sapienza, 00161 Rome, Italy)

Abstract

This article investigates the effects of board size on financial performance and the indirect effects of this relationship on social innovation (SI). An Ordinary Least Squares (OLS) model was run on a stratified random sample of 111 Italian local state-owned enterprises (SOEs). Data refer to the year 2018. Many other prior studies have provided empirical evidence on the connection between board size and financial performance, with controversial results. In addition, none of them have investigated the context of local Italian SOEs, and none have linked this relationship with SI. This gap is significant given the growing role of Italian local SOEs in addressing public needs and promoting SI. We discovered that a larger board enhances financial performance in the sample analysed. This result finds its foundations in resource dependence theory, independence theory, and in the work of some agency theorists, and it also supports these theoretical lenses. In addition, in line with arguments on the theory of shared value, we support the view that the positive relationship between board size and financial performance incentivises SI.

Suggested Citation

  • Cristina Cersosimo & Nathalie Colasanti, 2025. "Board Size and Financial Performance as a Driver for Social Innovation: Evidence from Italian Local State-Owned Enterprises," Administrative Sciences, MDPI, vol. 15(7), pages 1-19, June.
    • Handle: RePEc:gam:jadmsc:v:15:y:2025:i:7:p:247-:d:1688193
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2076-3387/15/7/247/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2076-3387/15/7/247/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Phathutshedzo Lemana & Reon Matemane & Maatabudi Mokabane, 2025. "Corporate Social Responsibility as a Driver of Financial Performance: An Exploration of South African Companies," JRFM, MDPI, vol. 18(5), pages 1-23, May.
    2. Milton Harris & Artur Raviv, 2008. "A Theory of Board Control and Size," The Review of Financial Studies, Society for Financial Studies, vol. 21(4), pages 1797-1832, July.
    3. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    4. Tim Heubeck & Reinhard Meckl, 2023. "Microfoundations of innovation: A dynamic CEO capabilities perspective," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(6), pages 3108-3126, September.
    5. Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2004. "Board characteristics, accounting report integrity, and the cost of debt," Journal of Accounting and Economics, Elsevier, vol. 37(3), pages 315-342, September.
    6. Shaoul, Jean & Stafford, Anne & Stapleton, Pamela, 2012. "Accountability and corporate governance of public private partnerships," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(3), pages 213-229.
    7. Amanpreet Kaur & Mahesh Joshi & Sharad Sharma & Gagandeep Singh, 2024. "Revisiting tokenism: impact of gender diversity on corporate social performance of Indian companies," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 74(5), pages 1507-1532, November.
    8. Hamdi Ben‐Nasr & Narjess Boubakri & Jean‐Claude Cosset, 2012. "The Political Determinants of the Cost of Equity: Evidence from Newly Privatized Firms," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 50(3), pages 605-646, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Armstrong, Christopher S. & Guay, Wayne R. & Weber, Joseph P., 2010. "The role of information and financial reporting in corporate governance and debt contracting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 179-234, December.
    2. Muhammad Imran Nazir & Muhammad Zulfiqar & Muhammad Bilal Saeed & Yasir Habib, 2016. "The Influence of Board Characteristics on Shareholders Assessment of Risk for Small and Large Firms: Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 596-606.
    3. Arun Upadhyay, 2014. "Social Concentration on Boards, Corporate Information Environment and Cost of Capital," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(7-8), pages 974-1001, September.
    4. Muluneh HIDETO DATO & Marek HUDON & Roy MERSLAND, 2020. "Board Governance: Does Ownership Matter?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 5-28, March.
    5. John R. Graham & Sonali Hazarika & Krishnamoorthy Narasimhan, 2011. "Corporate Governance, Debt, and Investment Policy During the Great Depression," Management Science, INFORMS, vol. 57(12), pages 2083-2100, December.
    6. Ye, Yanyi & Wang, Hongping & Tian, Kailan & Li, Meng, 2024. "Supply chain risks and the cost of debt: Evidence from the COVID-19 pandemic," Research in International Business and Finance, Elsevier, vol. 70(PB).
    7. Chen, Ruiyuan & El Ghoul, Sadok & Guedhami, Omrane & Wang, He, 2017. "Do state and foreign ownership affect investment efficiency? Evidence from privatizations," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 408-421.
    8. Rahman, Dewan & Malik, Ihtisham & Ali, Searat & Iqbal, Jamshed, 2021. "Do co-opted boards increase insider profitability?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    9. Wang, Lu & Su, Zhong-qin & Fung, Hung-Gay & Jin, Hong-min & Xiao, Zuoping, 2021. "Do CEOs with academic experience add value to firms? Evidence on bank loans from Chinese firms," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    10. Attiya Y. Javid & Robina Iqbal, 2010. "Corporate Governance in Pakistan : Corporate Valuation, Ownership and Financing," Governance Working Papers 22830, East Asian Bureau of Economic Research.
    11. Souad Chaieb, 2021. "The Impact of Cash Holding on Debt Cost," International Journal of Economics and Financial Issues, Econjournals, vol. 11(6), pages 75-93.
    12. Altunbaş, Yener & Thornton, John & Uymaz, Yurtsev, 2020. "The effect of CEO power on bank risk: Do boards and institutional investors matter?✰," Finance Research Letters, Elsevier, vol. 33(C).
    13. Lélis Pedro Andrade & Aureliano Angel Bressan & Robert Aldo Iquiapaza, 2017. "Dual class shares, board of directors’ effectiveness and firm’s market value: an empirical study," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 1053-1092, December.
    14. Dak-Adzaklo, Cephas Simon Peter & Wong, Raymond M.K., 2024. "Corporate governance reforms, societal trust, and corporate financial policies," Journal of Corporate Finance, Elsevier, vol. 84(C).
    15. Sabrina Pisano & Luigi Lepore & Rocco Agrifoglio, 2015. "Corporate governance and information asymmetry between shareholders and lenders: an analysis of Italian listed companies," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(2), pages 27-53.
    16. Franco Ernesto Rubino & Paolo Tenuta & Domenico Rocco Cambrea, 2017. "Board characteristics effects on performance in family and non-family business: a multi-theoretical approach," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 623-658, September.
    17. Ginesti, Gianluca & Ossorio, Mario & Dawson, Alexandra, 2023. "Family businesses and debt maturity structure: Focusing on family involvement in governance to explain heterogeneity," Journal of Family Business Strategy, Elsevier, vol. 14(2).
    18. Aman, Hiroyuki & Nguyen, Pascal, 2013. "Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms," Research in International Business and Finance, Elsevier, vol. 29(C), pages 14-34.
    19. Boubakri, Narjess & El Ghoul, Sadok & Guedhami, Omrane & Hossain, Mahmud, 2020. "Post-privatization state ownership and bank risk-taking: Cross-country evidence," Journal of Corporate Finance, Elsevier, vol. 64(C).
    20. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, Centre for Economic Policy Research.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jadmsc:v:15:y:2025:i:7:p:247-:d:1688193. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.