Board Characteristics And Firm Financial Performance

Many scholars all over the world have always focused on if the board can have an influence on the firm's performance.This thesis analyzes the theories about the relationship between board characteristics and firm performance in detail first. Then we choose 127 companies in Guangdong province as our study object. The data come from their yearly financial report of 2005. We analyze empirically the relationship between board characteristics (board size, the rate of independent directors, the share proportions of the board members, the frequency of the board meeting and the condition of whether the chairman of board of directors acts as general manager) and firm performance(measured by ROE and EPS). The results show that the board size and firm performance present distinct shape U. The rate of independent directors is negatively correlated with firm performance. The share proportions of the board members and firm performance do not present shape U. The frequency of the board meeting is negatively correlated with firm performance. Duality is positively correlated with firm performance.According to the conclusions above, we further propose that the board system should be perfected and we give some suggestions to improve board efficiency.