Australian board composition and performance: Meta-analysis and implications for governance research

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Abstract

This paper aims to inform the ongoing emphasis on board structure (Yu, 2023) by reconciling the Australian empirical evidence on firm performance-board structure links. While international findings are instructional, differences between governance systems across nations (Alabdullah et al., 2022; Outa & Kutubi, 2021) highlight the importance of understanding the salient nature of the Australian context compared to the UK and US (e.g., fewer listed companies with lower levels of institutional shareholding, higher agency costs and higher compliance to the prescribed governance practices. Meta-analysis was employed to reach an overall Pearson correlation for the association between firm performance and four board composition characteristics (i.e., board independence, CEO duality, board size, and female ratio on boards). The meta-analysis employed includes all empirical studies that used Australian data to investigate firm performance-board structure links. This research also provides guidance on improved theorizing, measurement, and modelling for boards’ research. The results indicate that the correlation between each board’s independence, CEO duality, and financial performance is almost zero. Moreover, board size and female ratio on board have a small positive correlation with financial performance. This paper highlights the importance of considering a specific theory and evidence before employing intermediary variables as controls.

Keywords: Australia, Board Composition, Corporate Governance, Firm Performance, Meta-Analysis

Authors’ individual contribution: Conceptualization — A.B.M.A. and G.N.; Methodology — A.B.M.A. and G.N.; Software— A.B.M.A. and F.S.S.; Validation — G.N. and F.S.S.; Formal Analysis — A.B.M.A. and F.N.D.; Investigation — G.N. and F.S.S.; Resources — A.B.M.A. and F.N.D.; Data Curation — A.B.M.A., G.N., and F.N.D.; Writing — Original Draft — A.B.M.A. and F.S.S.; Writing — Review & Editing — G.N. and F.N.D.; Visualization — A.B.M.A.; Supervision — G.N.

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

JEL Classification: M41, M14, C88, G34

Received: 04.06.2023
Accepted: 31.01.2024
Published online: 02.02.2024

How to cite this paper: Alzoubi, A. B. M., Nicholson, G., Dahmash, F. N., & Shiyyab, F. S. (2024). Australian board composition and performance: Meta-analysis and implications for governance research. Journal of Governance & Regulation, 13(1), 203–213. https://doi.org/10.22495/jgrv13i1art18