Boards of Directors’ Characteristics and Firm Value: A Comparative Study between Egypt and USA

摘要

Purpose This research aims to compare the effect of board of directors’ characteristics on the firm’s value in Egypt as an emerging country and USA as a developed country. Five characteristics have been exposed from the literature review that may influence the enhancement of a firm’s value. In corporate governance, these characteristics are CEO duality, board independence, board size, board meetings and gender diversity. Design The model is developed and 84 Egyptian firms listed on the Egyptian stock exchange and 27 American firms listed on The Dow Jones Industrial Average (DJIA) are utilized in this research f or testing this model. The research covers a six-year period (2012-2017). Five main hypotheses and ten sub-hypotheses were derived from the model. GLS regression is used to test these hypotheses. Findings The results of this research revealed that board of directors’ characteristics affects firm value almost in the same way in both Egypt and the USA. The results revealed that board independence, board meetings and gender diversity are positively and significantly related to firm value in both countries. Furthermore, it displayed that board size affected firm value in both the Egyptian and American contexts negatively and significantly. Finally, the results showed that the CEO duality has a positive effect on firm value in the Egyptian setting while it has a negative effect on the firm value in the American setting. This research contributes to the literature on the subject of how corporate governance enhances a firm’s value. Participants in the stock market would benefit from the results when assessing the board of directors’ roles in enhancing the firm’s value. Regulators will be able to use the results of this research to recognize the critical characteristics of corporate governance and to assess the governance practices of the board of directors.