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Board Expertise Background and Firm Performance

Author

Listed:
  • Chiou-Yann Lee

    (Department of Accounting, Chaoyang University of Technology, 168 Jifong E. Road, Wufong District, Taichung City 41349, Taiwan)

  • Chun-Ru Wen

    (Department of Accounting, Chaoyang University of Technology, 168 Jifong E. Road, Wufong District, Taichung City 41349, Taiwan)

  • Binh Thi-Thanh-Nguyen

    (Department of Accounting, Chaoyang University of Technology, 168 Jifong E. Road, Wufong District, Taichung City 41349, Taiwan)

Abstract

This study presents a novel financial performance forecasting method that combines the threshold technique with Artificial Neural Networks (ANN). It applies the threshold regression method to identify the factors within the board of directors that influence the financial performance of traditional industries in Taiwan. The findings indicate that the ANN method effectively predicts financial performance by using relevant board structure data. Furthermore, the empirical results suggest that boards with more members demonstrate increased profitability. Additionally, a more significant presence of board members with accounting expertise contributes to more consistent profits. In contrast, an increased presence of members with financial expertise has a more pronounced impact on profitability.

Suggested Citation

  • Chiou-Yann Lee & Chun-Ru Wen & Binh Thi-Thanh-Nguyen, 2024. "Board Expertise Background and Firm Performance," IJFS, MDPI, vol. 12(1), pages 1-15, February.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:1:p:17-:d:1338676
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    References listed on IDEAS

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    1. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
    2. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    3. Michael Jensen & Edward J. Zajac, 2004. "Corporate elites and corporate strategy: how demographic preferences and structural position shape the scope of the firm," Strategic Management Journal, Wiley Blackwell, vol. 25(6), pages 507-524, June.
    4. Ngo, Chin & Nguyen, Quyen Le Hoang Thuy To & Nguyen, Phong Thanh, 2020. "Social Capital and Corporate Performance: Evidence from State Capital Enterprises in Vietnam," MPRA Paper 103440, University Library of Munich, Germany, revised 18 Apr 2020.
    5. Nishant Dass & Omesh Kini & Vikram Nanda & Bunyamin Onal & Jun Wang, 2014. "Board Expertise: Do Directors from Related Industries Help Bridge the Information Gap?," The Review of Financial Studies, Society for Financial Studies, vol. 27(5), pages 1533-1592.
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    Cited by:

    1. Abdulaziz Ahmed Aljammaz & Suresh Ramakrishnan & Hamid Ghazi H. Sulimany & Saleh F.A. Khatib & Adnan Ali & Ehsan Almoataz & Abdulrhman Atllah Alharbi, 2025. "Mediating role of financial sustainability between board diversity and firms’ resilience: evidence from Saudi listed firms," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.
    2. Asaad Mubarak Hussien Musa & Rayan Alqubaysi & Hassan Ali Alqahtani, 2025. "The Effect of Board Characteristics on ESG Commitment in Saudi Arabia: How Diversity, Independence, Size, and Expertise Shape Corporate Sustainability Practices," Sustainability, MDPI, vol. 17(12), pages 1-22, June.

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