Effects of Board of Directors on Firm Performance: A Study on KSE Firms

Abstract

This paper investigates the impact of number of independent directors, split role of independent directors, board meeting and female directors on firm performance in KSE. The study measure the ROA on firm performance. Because agency theory suggests that companies with better corporate governance standards perform better. The study proposes that better governed KSE firms would have greater performance and higher valuation. The study finds that our composite measure of corporate governance is positively and significantly associated with firm performance and valuation. These findings have implications for policy makers, researchers, managers, and investors in general and those in emerging markets in particular.

Keywords: Independent directors, split role, board meeting, female directors, ROA