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Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance
Author(s) -
Kiel Geoffrey C.,
Nicholson Gavin J.
Publication year - 2003
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/1467-8683.00318
Subject(s) - corporate governance , accounting , demographics , normative , business , value (mathematics) , composition (language) , emerging markets , political science , finance , sociology , law , linguistics , philosophy , demography , machine learning , computer science
In many respects, Australian boards more closely approach normative “best practice” guidelines for corporate governance than boards in other Western countries. Do Australian firms then demonstrate a board demographic‐organisational performance link that has not been found in other economies? We examine the relationships between board demographics and corporate performance in 348 of Australia's largest publicly listed companies and describe the attributes of these firms and their boards. We find that, after controlling for firm size, board size is positively correlated with firm value. We also find a positive relationship between the proportion of inside directors and the market‐based measure of firm performance. We discuss the implications of these findings and compare our findings to prevailing research in the US and the UK.