Siaw, Mo Wai (2022) The effect of board characteristics on firm financial performance of listed companies in Hong Kong. Doctoral thesis, University of Wales Trinity Saint David.
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Siaw Mo Wai (2022) DBA The effect of board characteristics on firm financial performance.pdf - Accepted Version Available under License CC-BY-NC-ND Creative Commons Attribution Non-commercial No Derivatives. Download (2MB) | Preview |
Abstract
Corporate board characteristics are mainly due to the nature of directors because boards are composed of members with different backgrounds, such as family background, gender, and classification of directors which may affect directors’ roles and responsibilities within a board. Since executive directors are responsible for smooth daily operation and maximization of shareholders’ wealth, board characteristics may affect firm’s financial performances. Hence, the Stock Exchange of Hong Kong (“HKEX”) proposed requirements on appointments of female directors and independent non-executive directors to boards. There is also new regulation to require the listed companies to disclose board members’ attendance at general meeting in the poll results announcements. Accordingly, this study aims to investigate the extent to which board characteristics may influence firm’s financial performances. This study evaluated three financial indicators, i.e., ROA, Tobin’s Q, and Z-score by using six independent variables of board characteristics, the board size as moderating variable and firm size and company type as controlling variables, based on the financial data of 120 sample companies from 2015 to 2019. All data are extracted from the website of the HKEX or the websites of the targeted companies. This study performed correlated coefficient analysis, hierarchical regression analysis, and independent samples t-test by running SPSS on 600 sample cases. It interpreted the results by applying three theories of corporate governance, i.e., agency theory, stewardship theory, and resource dependence theory. The agency theory explains the relationship between the board and the shareholders as well as other stakeholders. The stewardship theory explains the relationship between the board and the management of the company. The resource dependence theory explains the responsibility of the board members to bring their distinct resources to the company. For the results, family involvement was found to be positively related to ROA. There was the difference between CEO duality or CEO without duality of the listed companies towards Tobin's Q. The education level of the board was found to be positively related to Tobin's Q. The percentage of independent non-executive directors was found to be positively related to Z-Score. For the moderating variable, the board size, was found to affect the relationship between dependent variables and independent variables in different degrees. For ROA, the board size exerted the negative influence on the relationship between CEO duality and ROA. The board size exerted the positive influence on the relationship between the number of independent non-executive directors and ROA. For Tobin’s Q, the board size exerted the negative influence on the relationship between the number of family directors and Tobin’s Q. ii The board size exerted the positive influence on the relationship between the number of board members with master’s degree or above and Tobin’s Q. For Z-Score, the board size did not exert any influence on the relationship between any board characteristics and Z-Score. This study revealed three key findings: (1) different board structures may influence different firm indicators, (2) division of responsibilities of board members is important, and (3) a good structure of board members can strengthen the confidence of existing shareholders and attract potential investors. This study contributes to the knowledge of board characteristics by illustrating how applied theories can explain the relationships between board characteristics and financial performances. It also makes a practical contribution to the selection of different types of board members. In addition, it provides suggestions about how to improve financial indicators of listed companies in Hong Kong as well as directions for future studies.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HG Finance |
| Divisions: | Theses and Dissertations > Doctoral Theses |
| Depositing User: | Natalie Williams |
| Date Deposited: | 20 Oct 2022 10:27 |
| Last Modified: | 14 Aug 2024 09:45 |
| URI: | https://repository.uwtsd.ac.uk/id/eprint/2122 |
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