Board Attributes, Board Effectiveness And Financial Performance

Corporate board has been a main focus in the area of corporate governance study. Researchers studied the relationship between board attributes and company financial performance in a simple way of "Input-Output" model, which ignored the influence of the team process. While in the field of corporate governance study, the most interesting issue is what kind of board is an effective board and how the board work effectively in the form of a team.This study examines the relationship between board attributes and company financial performance from a team perspective. Applying key attributes of highly effective team(sufficient knowledge, information, power and incentives)into the research of board, this study examines the relationship between board attributes and board effectiveness. And it examines whether board effectiveness serves as a mediator between the board attributes and company financial performance in a way of "Input-Process-Output" model study.This study examines the relationship of board attributes, board effectiveness and company financial performance by analyzing a sample data of 204 companies with import and export business of Jiangsu Province. This study proposes 7 hypotheses, and empirical results indicate that, knowledge of the board is not significantly related to board effectiveness, information of the board is positively related to board effectiveness, power of the board is positively related to board effectiveness, there's a curvilinear(inverted U-shape) relationship between board ownership and board effectiveness, time of the board is positively related to board effectiveness, board effectiveness is positively related to company financial performance, and board effectiveness partly mediates the relationship between board attributes(information, power, incentives and time) and company financial performance.Based on the results of the empirical study, this article suggests that, the firms should increase the amount of information available to the boards and make sure that the boards having more power relative to the CEOs; the boards should keep a proper percentage of stock of the firms, not too high or too low; and the boards should spend more time on board activities.