The relationship between firm performance and board characteristics in China

Abstract

This study aims to examine the relationship between various dual board characteristics and the performance of publicly traded companies in China. Specifically, this study investigates the links between factors such as supervisory board presence, board independence, CEO duality, the inclusion of women directors, the frequency of board meetings, and firm performance as measured by Tobin’s Q. This investigation is based on data gathered from 1,672 companies listed on both the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) during the year 2018. To analyze these relationships, a multiple regression model is employed. The study's results indicate that frequency of board meetings and CEO duality are positively associated with the firm performance. However, no significant relation is observed between the inclusion of women directors and firm performance. Additionally, the study finds that the presence of a supervisory board and board independence do not exhibit any noteworthy associations with firm performance. These findings contribute valuable empirical insights into the connections between the internal corporate governance structure and the performance of firms in the Chinese context. Ultimately, the results of this study may offer valuable guidance for policymakers and corporate managers in China regarding effective corporate governance practices.