Board composition and Firm Performance in South Africa
Date Issued
2010
Date
2010
Author(s)
Priscilla Nkhoma, Lungile
Abstract
For the past couple of decades, scholarly and popular concern with corporate governance arrangements in publicly listed companies has increased in intensity. This research study seeks to examine the relationship between board composition variables and firm performance in South Africa. Unlike the majority of prior literature that has utilized data from the United States, data used for this study was collected and analysed from a sample of publicly listed firms in South Africa. South Africa is an important emerging economy within the global economy.
The study uses a sample which includes eighty companies listed on the JSE Securities exchange during 2008. Two performance measures return on assets (ROE) and return on assets (ROA) were used. Board composition was analysed in terms of four characteristics being the percentage of non-executive directors on the board of directors, the percentage of people of colour in the board of directors, the percentage of women in the board of directors and overall board size.
The empirical results indicated that there is a positive relationship between the percentage of people of colour on the board of directors and firm performance. Other findings suggest that women representation and the presence of non-executive directors are not an important determinant of company performance in South African. Consistent with earlier empirical studies, there was no significant relationship between board size and company performance in South African listed companies.
The overall findings of this study conclude that the board composition characteristics mentioned in this study are not vital determinants of company performance.
Subjects
Performance
corporate governance
board composition, women
colour
board size
non-executive directors, South Africa
Type
thesis
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