التكامل الاقتصادي
Volume 9, Numéro 1, Pages 381-397
2021-03-31

The Impact Of The Boards Of Directors On Company Financial Performance In The Uk Firms.



Authors : Bilrras Ali Abdelmnam Mohamed S. .

Abstract

The purpose of this study is to examine the impact of management board on its performance in the UK. It studies the link between financial performance using ROA and NEDs, size and board meetings. The secondary data was used by collecting it directly from annual reports. The sample consists of 25 firms listed on London Stock Exchange within FTSE-100 over 2010 to 2014 period. The findings show an inverse association between both board size, board meetings and firm performance. Based on that, UK firms need to assign small board because it has more effective communication and coordination than a larger board. Therefore, firms do not need to meet more than usual every year. However, the results reveal a positive association between NEDs and company performance. Proper representation of external directors mitigates conflict of interest between shareholders and management since they monitor companies' performance. This leads to obligate managers working on maximising shareholders’ worth.

Keywords

Board of Directors ; Return on Assets. ; Financial Performance ; Non-Executive Directors ; Board size

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