Analysis on the Impact of Board Characteristics on Firm Financial Performance

This study has examined the impact of board characteristics on firm financial performance using a sample of 30 UK listed non-financial firms. Board of directors as an important governance mechanism, it was argued that effective board can improve firm financial performance (Mehrotra, 2016). Moreover, Selman and Selman (2009) added that board structure and composition is an important determinant of firm performance since their composition indicates how competent the board is in performing their duties. This study reveals a strong evidence of positively significant relationship between proportion of non-executive directors on board and firm financial performance. However, the tudy did not find any evidence of significant relationship between other board characteristics and firm financial performance. Though this study uses only cross sectional data for 2015 which can be a limitation. Small sample size and measure of performance can also be another limitation for this study. Hence the study recommends the use of time series data and various performance measurements such as Tobins Q.