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An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms

Yıl 2011, Cilt: 2011 Sayı: 1, 1 - 21, 01.06.2011

Öz

The paper investigates the relationship between board size and firm performance in Istanbul Stock Exchange (ISE) National Manufacturing Index firms for the period of 2004-2009. The Board of Directors is a vital internal mechanism of corporate governance and plays a crucial role in the management of the firm. Specific board features, like board size, and its‟ impact on firm performance have been extensively studied. This study employs two performance measures; one of them is Return on Assets (ROA), which is an earnings based performance measure. The second performance measure is Economic Value Added (EVA), which is a value based performance measure. The study exhibits that the relationship between board size and EVA is insignificant but there is a positive significant relationship between board size and Return on Assets (ROA). The study concludes by discussing the possible reasons for the findings and proposes recommendations for future studies on the topic.

Kaynakça

  • Adams, R.B. and H., Mehran, (2005). Corporate Performance, Board Structure and its Determinants in the Banking Industry. Working Paper, EFA Moscow Meetings. Anderson, R.C., Mansi, S. & Reeb, D.M., (2004). Board Characteristics, Accounting Report Integrity, and the Cost of Debt. Journal of Accounting and Economics, 37(3), 315-342 Axon, D. A. J. (2010). Best Practices in Planning and Performance Management Radically Rethinking Management for a Volatile World. (New Jersey): John Wiley & Sons, Inc. Barnhart, S.W. & Roseinstein, S. (1998). Board Composition, Managerial Ownership, and Firm Performance: An Empirical Analysis. The Financial Review, 33, 1-16. Becht, M., Bolton, P. & Röel, A. (2002). Corporate Governance and Control. European Corporate Governance Institute, Working Paper No: 02/2002, 10–14. Behn, R. D. (2003). Why Measure Performance? Different Purposes Require Different Measures. Public Administration Review, 63, 5, 586-605. Belkhir, M., (2009). Board of Director's Size and Performance in Banking. International Journal of Managerial Finance, 5, 201-221. Bhagat, S. & Black, B.S., (2002). The Non-Correlation Between Board Independence and Long Term Firm Performance. Journal of Corporation Law, 27, 231-274. Bloxham, E., (2002). Economic Value Management: Applications and Techniques, (New Jersey): John Wiley&Sons, Inc. Bonn, I., Yoshikawa, T. & Phan, P.H., (2004). Effects of Board Structure on Firm Performance: A Comparison between Japan and Australia. Asian Business & Management, 3, 105-125. Cheng, S., Evans, J.H., & Nagarajan, N. J., (2008). Board Size and Firm Performance: The Moderating Effects of the Market for Corporate Control. Review of Quantitative Finance and Accounting, 31, 121-145. Conyon, M.J., & Peck, S.I., (1998). Board Size and Corporate Performance: Evidence from European Countries. European Journal of Finance, 4, 291-304. Daft, R.L., (1997). Management, (Florida): The Dryden Press. Dechow, P.M., Sloan, R.G. & Sweeney A. P. (1996). Causes and consequences of earnings manipulation: an analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research,13, 1–36. Ehrbar, A. (1998). EVA: The Real Key to Creating Waelth. (New York): John Wiley & Sons, Inc. Eisenberg, T., S., Sundgren, S. & Wells, M.T. (1998). Larger Board Size and Decreasing Firm Value in Small Firms. Journal of Financial Economics, 48, 35-54. Fama, E.F., & Jensen, M.C. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26, 301-325. Grant, J. L. (1997). Foundations of Economic Value Added. (Pennsylvania) Guest, P.M., (2009). The Impact of Board Size on Firm Performance: Evidence from the UK. The European Journal of Finance, 15, 4, 385-404. Haleblian, J. & Finkelstein, S. (1993). Top Management Team Size, CEO Dominance and Firm Performance: The Moderating Roles of Environmental Turbulence and Discretion. Academy of Management Journal, 36, 4, 844-863. Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Journal of Business Finance and Accounting, 33,7-8, 1034-1062. Hermalin, B.E. & Weisbach, M.S. (1991). The Effects of Board Composition and Direct Incentives on Firm Performance. Financial Management, 20,4, 101-112. Hermalin, B.E. & Weisbach, M.S. (1988). The Determinants of Board Composition. Rand Journal of Economics, 19, 4, 589-606. Hermalin, B.E. & Weisbach, M.S. (2003). Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Evidence. Economic Policy Review, 9, 7-26. Hofstede, www.geert-hofstede.com Huther, J., (1997). An Empirical Test of the Effect of Board Size on Firm Efficiency. Economics Letters, 54, 3, 259-264. Jensen, M., (1993). The Modern Industrial Revolution, Exit and the Failure of Internal Control Systems. Journal of Finance 48, 3, 831–880. Judge W. & Zeithaml, C. (1992). Institutional and Strategic Choice Perspectives on Board Involvement in the Strategic Decision Process. Academy of Management Journal, 35, 766-794. Jonathan , J., Daily, C.M. & Ellstrand, A.E. (1996). Boards of Directors: A Review and Research Agenda. Journal of Management, 22, 3, 409-438. Koller, T., Goedhart, M. & Wessels, D. (2005). Valuation: Measuring and Managing the Value of Companies. (New Jersey): McKinsey and Company. Kravchuk, R. S. & Schack, R. W. (1996). Designing Effective Performance Measurement Systems Under the Government Performance and Results Act of 1993. Public Administration Review, 56,4, 348–58. Kyereboah-Coleman, A. & Biepke, N. (2006). The Link Between Corporate Governance and Performance of the Non-Traditional Export Sector: Evidence from Ghana. Corporate Governance: International Journal of Business in Society, 6,5, 609-623. La Porta, R., Lopez-de-Silanes, F., Shleifer, A. & Vishny, R. (1999). Investor Protection: Origins,Consequences, Reform. National Bureu of Economic Research, Working Paper No: 7428. Langevoort, D. C. The Human Nature of Corporate Boards: Law, Norms and The Unintended Consequences of Independence and Accountability. Georgetown Univesity Law Center, Working Paper No: 241402. Larmou, S., & Vafeas, N. (2009). The Relation Between Board Size and Firm Performance in Firms with a History of Poor Operating Performance. Journal of Management Governance, 14,1, 61-85. Lasfer, M.A. (2004). On the Monitoring Role of The Board of Directors: The Case of The Adoption of Cadbury Recommendations in the UK. Advances in Financial Economics, 9, 287-326. Lichiello, Patricia Bernard J. Turnock, Guidebook for Performance Measurement, Turning point, The Robertwood Johnson Foundation, 9-11 Lipton, M., & Lorsch, J.W. (1992). A Modest Proposal for Improved Corporate Governance. BusinessLawyer, 48, 59-77. Loderer, C. & Peyer, U. (2002). Board Overlap, Seat Accumulation and Share Prices. European Financial Management, 8, 2, 165-92. Mak, Y.T. & Y., Kusnadi, Y. (2005). Size Really Matters: Further Evidence on the Negative Relationship Between Board Size and Firm Value. Pacific-Basin Finance Journal, 13, 3, 301-318. Morck, R., D., Wolfenzon, D. & Yeung, B. (2004). Corporate Governance, Economic Entrenchment and Growth. Working Paper, NBER. OECD (1999). OECD Principles of Corporate Governance, Directorate For Financial, Fiscal and Enterprise Affairs. Otley, D. (1999). Performance Management: A Framework for Management Control Systems Research Management Accounting Research, 10, 363-382 Parker, C. (2000). Performance Measurement, Work Study, 49, 2, 63-66. Pratt, S. P. & Grabowski, R. J. (2008). Cost of Capital: Applications and Examples. (New Jersey), John Wiley& Sons, Inc. Shleifer, A. R. & Vishny, W. (1996). A Survey of Corporate Governance. National Bureu of Economic Research, Working Paper No: 5554. Tanna, S., Pasiouras F. & Nnadi, M. (2008). The Effect of Board Size and Composition on The Efficiency of UK Banks. Economics, Finance and Accounting Applied Research Working Paper, Coventry University. Van Ees H., Postma T.J. & Sterken, E. (2003). Board Composition and Firm Performance in the Netherlands. Eastern Economic Journal, 29, 41-58. Yermack, D. (1996). Higher Market Valuation of Companies with a Small Board of Directors. Journal of Financial Economics. 40,1, 185-211. Young D. & O‟Brein, S. F. (2000). EVA and Value-Based Management A Practical Guide to Implementation. McGraw-Hill - http://www.valueadvisors.com/Attachments/Book%20Review%20-%20pdf.pdf Yurtoğlu, B. (2003). Corporate Governance and Implications for Minority Shareholders in Turkey. Journal of Corporate Ownership & Control, 1, 1, 72-86. Zahra, S. & Pearce, J. A. (1989). Boards of Directors and Corporate Financial Performance: A Review and Integrative Model. Journal of Management, 15, 2, 291-334.
Yıl 2011, Cilt: 2011 Sayı: 1, 1 - 21, 01.06.2011

Öz

Kaynakça

  • Adams, R.B. and H., Mehran, (2005). Corporate Performance, Board Structure and its Determinants in the Banking Industry. Working Paper, EFA Moscow Meetings. Anderson, R.C., Mansi, S. & Reeb, D.M., (2004). Board Characteristics, Accounting Report Integrity, and the Cost of Debt. Journal of Accounting and Economics, 37(3), 315-342 Axon, D. A. J. (2010). Best Practices in Planning and Performance Management Radically Rethinking Management for a Volatile World. (New Jersey): John Wiley & Sons, Inc. Barnhart, S.W. & Roseinstein, S. (1998). Board Composition, Managerial Ownership, and Firm Performance: An Empirical Analysis. The Financial Review, 33, 1-16. Becht, M., Bolton, P. & Röel, A. (2002). Corporate Governance and Control. European Corporate Governance Institute, Working Paper No: 02/2002, 10–14. Behn, R. D. (2003). Why Measure Performance? Different Purposes Require Different Measures. Public Administration Review, 63, 5, 586-605. Belkhir, M., (2009). Board of Director's Size and Performance in Banking. International Journal of Managerial Finance, 5, 201-221. Bhagat, S. & Black, B.S., (2002). The Non-Correlation Between Board Independence and Long Term Firm Performance. Journal of Corporation Law, 27, 231-274. Bloxham, E., (2002). Economic Value Management: Applications and Techniques, (New Jersey): John Wiley&Sons, Inc. Bonn, I., Yoshikawa, T. & Phan, P.H., (2004). Effects of Board Structure on Firm Performance: A Comparison between Japan and Australia. Asian Business & Management, 3, 105-125. Cheng, S., Evans, J.H., & Nagarajan, N. J., (2008). Board Size and Firm Performance: The Moderating Effects of the Market for Corporate Control. Review of Quantitative Finance and Accounting, 31, 121-145. Conyon, M.J., & Peck, S.I., (1998). Board Size and Corporate Performance: Evidence from European Countries. European Journal of Finance, 4, 291-304. Daft, R.L., (1997). Management, (Florida): The Dryden Press. Dechow, P.M., Sloan, R.G. & Sweeney A. P. (1996). Causes and consequences of earnings manipulation: an analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research,13, 1–36. Ehrbar, A. (1998). EVA: The Real Key to Creating Waelth. (New York): John Wiley & Sons, Inc. Eisenberg, T., S., Sundgren, S. & Wells, M.T. (1998). Larger Board Size and Decreasing Firm Value in Small Firms. Journal of Financial Economics, 48, 35-54. Fama, E.F., & Jensen, M.C. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26, 301-325. Grant, J. L. (1997). Foundations of Economic Value Added. (Pennsylvania) Guest, P.M., (2009). The Impact of Board Size on Firm Performance: Evidence from the UK. The European Journal of Finance, 15, 4, 385-404. Haleblian, J. & Finkelstein, S. (1993). Top Management Team Size, CEO Dominance and Firm Performance: The Moderating Roles of Environmental Turbulence and Discretion. Academy of Management Journal, 36, 4, 844-863. Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Journal of Business Finance and Accounting, 33,7-8, 1034-1062. Hermalin, B.E. & Weisbach, M.S. (1991). The Effects of Board Composition and Direct Incentives on Firm Performance. Financial Management, 20,4, 101-112. Hermalin, B.E. & Weisbach, M.S. (1988). The Determinants of Board Composition. Rand Journal of Economics, 19, 4, 589-606. Hermalin, B.E. & Weisbach, M.S. (2003). Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Evidence. Economic Policy Review, 9, 7-26. Hofstede, www.geert-hofstede.com Huther, J., (1997). An Empirical Test of the Effect of Board Size on Firm Efficiency. Economics Letters, 54, 3, 259-264. Jensen, M., (1993). The Modern Industrial Revolution, Exit and the Failure of Internal Control Systems. Journal of Finance 48, 3, 831–880. Judge W. & Zeithaml, C. (1992). Institutional and Strategic Choice Perspectives on Board Involvement in the Strategic Decision Process. Academy of Management Journal, 35, 766-794. Jonathan , J., Daily, C.M. & Ellstrand, A.E. (1996). Boards of Directors: A Review and Research Agenda. Journal of Management, 22, 3, 409-438. Koller, T., Goedhart, M. & Wessels, D. (2005). Valuation: Measuring and Managing the Value of Companies. (New Jersey): McKinsey and Company. Kravchuk, R. S. & Schack, R. W. (1996). Designing Effective Performance Measurement Systems Under the Government Performance and Results Act of 1993. Public Administration Review, 56,4, 348–58. Kyereboah-Coleman, A. & Biepke, N. (2006). The Link Between Corporate Governance and Performance of the Non-Traditional Export Sector: Evidence from Ghana. Corporate Governance: International Journal of Business in Society, 6,5, 609-623. La Porta, R., Lopez-de-Silanes, F., Shleifer, A. & Vishny, R. (1999). Investor Protection: Origins,Consequences, Reform. National Bureu of Economic Research, Working Paper No: 7428. Langevoort, D. C. The Human Nature of Corporate Boards: Law, Norms and The Unintended Consequences of Independence and Accountability. Georgetown Univesity Law Center, Working Paper No: 241402. Larmou, S., & Vafeas, N. (2009). The Relation Between Board Size and Firm Performance in Firms with a History of Poor Operating Performance. Journal of Management Governance, 14,1, 61-85. Lasfer, M.A. (2004). On the Monitoring Role of The Board of Directors: The Case of The Adoption of Cadbury Recommendations in the UK. Advances in Financial Economics, 9, 287-326. Lichiello, Patricia Bernard J. Turnock, Guidebook for Performance Measurement, Turning point, The Robertwood Johnson Foundation, 9-11 Lipton, M., & Lorsch, J.W. (1992). A Modest Proposal for Improved Corporate Governance. BusinessLawyer, 48, 59-77. Loderer, C. & Peyer, U. (2002). Board Overlap, Seat Accumulation and Share Prices. European Financial Management, 8, 2, 165-92. Mak, Y.T. & Y., Kusnadi, Y. (2005). Size Really Matters: Further Evidence on the Negative Relationship Between Board Size and Firm Value. Pacific-Basin Finance Journal, 13, 3, 301-318. Morck, R., D., Wolfenzon, D. & Yeung, B. (2004). Corporate Governance, Economic Entrenchment and Growth. Working Paper, NBER. OECD (1999). OECD Principles of Corporate Governance, Directorate For Financial, Fiscal and Enterprise Affairs. Otley, D. (1999). Performance Management: A Framework for Management Control Systems Research Management Accounting Research, 10, 363-382 Parker, C. (2000). Performance Measurement, Work Study, 49, 2, 63-66. Pratt, S. P. & Grabowski, R. J. (2008). Cost of Capital: Applications and Examples. (New Jersey), John Wiley& Sons, Inc. Shleifer, A. R. & Vishny, W. (1996). A Survey of Corporate Governance. National Bureu of Economic Research, Working Paper No: 5554. Tanna, S., Pasiouras F. & Nnadi, M. (2008). The Effect of Board Size and Composition on The Efficiency of UK Banks. Economics, Finance and Accounting Applied Research Working Paper, Coventry University. Van Ees H., Postma T.J. & Sterken, E. (2003). Board Composition and Firm Performance in the Netherlands. Eastern Economic Journal, 29, 41-58. Yermack, D. (1996). Higher Market Valuation of Companies with a Small Board of Directors. Journal of Financial Economics. 40,1, 185-211. Young D. & O‟Brein, S. F. (2000). EVA and Value-Based Management A Practical Guide to Implementation. McGraw-Hill - http://www.valueadvisors.com/Attachments/Book%20Review%20-%20pdf.pdf Yurtoğlu, B. (2003). Corporate Governance and Implications for Minority Shareholders in Turkey. Journal of Corporate Ownership & Control, 1, 1, 72-86. Zahra, S. & Pearce, J. A. (1989). Boards of Directors and Corporate Financial Performance: A Review and Integrative Model. Journal of Management, 15, 2, 291-334.
Toplam 1 adet kaynakça vardır.

Ayrıntılar

Birincil Dil Türkçe
Bölüm 2011/1 Makaleler
Yazarlar

S. Ahmet Menteş Bu kişi benim

Yayımlanma Tarihi 1 Haziran 2011
Yayımlandığı Sayı Yıl 2011 Cilt: 2011 Sayı: 1

Kaynak Göster

APA Menteş, S. A. (2011). An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms. Sosyal Bilimler Metinleri, 2011(1), 1-21.
AMA Menteş SA. An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms. Sosyal Bilimler Metinleri. Haziran 2011;2011(1):1-21.
Chicago Menteş, S. Ahmet. “An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms”. Sosyal Bilimler Metinleri 2011, sy. 1 (Haziran 2011): 1-21.
EndNote Menteş SA (01 Haziran 2011) An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms. Sosyal Bilimler Metinleri 2011 1 1–21.
IEEE S. A. Menteş, “An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms”, Sosyal Bilimler Metinleri, c. 2011, sy. 1, ss. 1–21, 2011.
ISNAD Menteş, S. Ahmet. “An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms”. Sosyal Bilimler Metinleri 2011/1 (Haziran 2011), 1-21.
JAMA Menteş SA. An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms. Sosyal Bilimler Metinleri. 2011;2011:1–21.
MLA Menteş, S. Ahmet. “An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms”. Sosyal Bilimler Metinleri, c. 2011, sy. 1, 2011, ss. 1-21.
Vancouver Menteş SA. An Analysis on Relationship Between Board Size and Firm Performance for Istanbul Stock Exchange (ISE) National Manufacturing Index Firms. Sosyal Bilimler Metinleri. 2011;2011(1):1-21.