Board Structures and Financial Performance of UK Top Firms : An Investigation of the Moderating Role of the Directors' Compensation

James O Alabede, Tony Muff

Research output: Contribution to JournalArticlepeer-review

Abstract

Although several studies have empirically investigated the connection between corporate governance structures and financial performance, evidence from the literature indicates that findings from these studies are inconsistent, hence inconclusive. In this light, some scholars suggest that the inconsistency in the findings could be an indication that there is factor(s) moderating the relationship between the two variables. For this reason, we investigate how corporate board structures relate to financial performance and the effect of directors’ financial compensation on such relationship using samples of the UK top firms. The findings of the study suggest that board composition is positively associated with financial performance (Tobin q). Other than that, the study also indicates that the effect of directors’ financial compensation interacts positively with board composition to influence financial performance. By implication, this finding demonstrates that financial rewards to the outside directors play an inevitable role in influencing the relationship between corporate board and financial performance.
Original languageEnglish
Pages (from-to)219-234
Number of pages16
JournalIssues in Social and Environmental Accounting
Volume9
Issue number3
DOIs
Publication statusPublished - 1 Nov 2015

Keywords

  • Board composition
  • United Kingdom
  • board leadership
  • corporate governance
  • directors ' financial compensation
  • tobin q

Fingerprint Dive into the research topics of 'Board Structures and Financial Performance of UK Top Firms : An Investigation of the Moderating Role of the Directors' Compensation'. Together they form a unique fingerprint.

Cite this