An investigation into the impact of board composition and ownership structure on corporate performance:the case of the FTSE all share listed companies

摘要

The thesis investigates two major mechanisms of corporate governance in terms of their impact on corporate performance. These mechanisms are the composition of board of directors, and the ownership structure. The thesis focuses on the UK FTSE All Shares non-financial firms. The reason for excluding financial firms was the different regulations that monitor the financial sector, and by excluding this sector from the study, findings more comparable with prior research can be obtained. The sample size arrived at 363 companies that had survived at least four years in the FTSE All shares between the year 2005 and 2010. The main hypotheses tested were whether board composition and ownership structure have an impact on firm performance, using Tobin’s Q (TQ) as a market based performance measure, and Return on Assets (ROA), Return on Equity (ROE), Return on Capital Employed (ROCE), and growth in total sales (SGRTH), as accounting-based performance measures. Correlation and multi-regression analysis (univariate and multivariate regression) were carried out to test these hypotheses. The results suggested a high positive association between board size and TQ, and insignificant association between board size and accounting-based performance measures (ROA and ROE), while some evidence was found of an impact of an independent board on firm performance. The results also found a negative association between blockholdings and performance during the financial crisis in 2008, whilst an insignificant relationship was observed before 2008.