UNRAVELING THE NEXUS: EXPLORING THE CONNECTION BETWEEN CORPORATE BOARD CHARACTERISTICS AND CORPORATE PERFORMANCE

Abstract

Over the past three decades, extensive research has illuminated the intricate connection between corporate boards and organizational performance. This relationship was notably emphasized by Professor John in his 1991 article titled "The Relative Power of CEOs and Boards of Directors." Robust boards have demonstrated the capacity to drive superior company performance, underscoring the profound association between board effectiveness and corporate outcomes.

However, the widespread dissemination of this finding has led many small and medium-sized enterprises to expand their board sizes as a performance enhancement strategy. This approach, it is increasingly clear, does not guarantee improved company performance. Often, company management has overlooked the nuanced impact of board size on performance, instead resorting to haphazard increases in the number, composition, or frequency of board meetings.

In recent years, as living standards have evolved, the relationship between board structures and corporate performance has become more complex. Professor Y. T Mak in 2005 and Professor Guest P.M in 2009 both challenged the traditional notion of a simple, positive correlation between board attributes and performance, their findings corroborated by extensive research.

This article leverages agency theory and management concepts to meticulously examine the multifaceted relationship between board characteristics and corporate performance. It critically evaluates the diverse effects of changes in board attributes on organizational outcomes, including board size, composition, CEO duality, meeting frequency, and internal member structures. Additionally, it delves into the gender dynamics within board membership. These comprehensive analyses form the core of this research, culminating in a concluding summary of the nuanced interplay between board attributes and corporate performance.