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The Effect of Board Characteristics on Firm Performance in Japan

Author

Listed:
  • Cha, Oona

    (Chung-Ang University)

  • Jung, Taehun

    (Kyungpook National University)

Abstract

This paper analyzes the effect of similarity among board members on firm performance in Japanese manufacturing firms. The similarity measures regarding age and educational background of individual directors were used to predict firm performance. The analyses revealed that similarity of age among board members had adverse effects on firm performance. In addition, greater variation in educational background among board members predicted better firm performance. It seems that homogeneity among board members in terms of age and education can affect the firm negatively by impeding exchange of diverse ideas. These findings emphasize that promoting diversity in terms of age and education in the board of directors is crucial for firm performance.

Suggested Citation

  • Cha, Oona & Jung, Taehun, 2009. "The Effect of Board Characteristics on Firm Performance in Japan," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 13(1), pages 135-156, June.
    • Handle: RePEc:ris:eaerev:0127
    DOI: 10.11644/KIEP.JEAI.2009.13.1.199
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    More about this item

    Keywords

    Board Of Directors; Similarity; Firm Performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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