THE IMPACT OF BOARD STRUCTURE ON THE FINANCIAL PERFORMANCE OF LISTED SOUTH AFRICAN COMPANIES

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Abstract

This study focuses on the role of the corporate board of directors and the relationship between the dynamics of board structure and the financial performance of listed South African companies. The research results found that the proportion of independent non-executive directors had a significant positive effect on firm performance as measured by earnings per share and enterprise value, but had no significant effect on Tobin’s Q ratio. Board ownership had a significant negative correlation with firm performance as measured by earnings per share, enterprise value and Tobin’s Q ratio. The number of directors serving on the corporate board had a significant positive effect on firm performance as measured by earnings per share, enterprise value and Tobin’s Q ratio. The study suggests that greater independent non-executive director representation, lower board share-ownership and larger board sizes should be encouraged to enhance firm performance.

Keywords: Board Composition, Board Ownership, Board Size, Corporate Governance, Earnings per Share, Enterprise Value, Independent Non-Executive Directors, Tobin’s Q Ratio

How to cite this paper: Meyer, E., & de Wet, J. H. v. H. (2013). The impact of board structure on the financial performance of listed South African companies. Corporate Board: role, duties and composition, 9(3), 18-31. https://doi.org/10.22495/cbv9i3art2