The effect of the board of directors on the performance: Case of Tunisian banks

Abstract

The board of directors plays a crucial role as an internal structure of corporate governance. Certainly, its efficiency is needy on the existence of numerous issues; the greatest significance is correlated to its characteristics that relay principally to the individuality of its memberships, board dimension, combining the purposes of pronouncement and regulator as well the grade of the individuality of the audit board and the diverse gender of the committee. To assess the authenticity of our assumptions, which stipulate the presence of deterministic characteristics of the committee on the profitability of Tunisian banks, we evaluated by three different ratios i.e., ROA (return on asset), ROE (return on equity), and MP (market performance); and we estimate three models with linear regressions. The empirical findings were performed on a data sample composed of 11 Tunisian banks listed on the Stock Exchange of Tunisia (SET) during the period from 1999 to 2018. From the estimated regressions, we find a satisfactory outcome indicating the significance of the influence of the characteristics of the committee on the banking performance in Tunisia. Then, the percentage of outside directors negatively affects the level of the financial performance of banks. The number of institutional administrators performs an essential role in improving financial performance. Finally, the duality of the Presidency of the Council General-Directorate has a negative effect on the level of stock market performance of Tunisian banks.

Keywords: Board, Economic Performance, Market Performance, Financial Performance

Authors’ individual contribution: Conceptualization – A.D. and L.J.; Methodology – A.D., A.L., and M.B.L.; Software – A.K.E. and M.B.L.; Validation – A.D., L.J., and A.K.E.; Formal Analysis – M.B.L. and A.L.; Investigation – A.D., M.B.L., and L.J.; Resources – A.D.; Data Curation – A.D. and A.K.E.; Writing – L.J. and A.D.; Supervision – A.D.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Authors are grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the quality of the paper.

JEL Classification: G32, G34

Received: 06.06.2020
Accepted: 24.07.2020
Published online: 31.07.2020

How to cite this paper: Derbali, A., Jamel, L., Lamouchi, A., Elnagar, A. K., & Ltaifa, M. B. (2020). The effect of the board of directors on the performance: Case of Tunisian banks. Corporate Law & Governance Review, 2(2), 8-17. https://doi.org/10.22495/clgrv2i2p1