Corporate Finance and Governance: The Effect of Board Composition on Financial Decision-Making

Authors

  • Mir Beburg Lehri Research Scholar, IBMS, University of Balochistan, Pakistan Author
  • Waqar Sadiq PhD, Air University, Multan Campus, Islamabad, Pakistan Author
  • Muhammad Faheem Ullah Research Scholar, Institute of Business Management Sciences, University of Agriculture Faisalabad, Pakistan Author
  • Muhammad Musaddique Latif Research Scholar, Fast School of Management, National University of Computer and Emerging Sciences, Pakistan Author

DOI:

https://doi.org/10.61506/01.00430

Keywords:

Corporate Governance, Board Composition, Financial Decision-Making, PLS-SEM, Board Independence, Board Diversity

Abstract

This study examined the impact of board composition on financial decision-making in corporate governance. Using a sample of 500 publicly traded companies from 2010 to 2024, we analyzed the relationship between board characteristics (size, independence, diversity) and financial outcomes (return on assets, debt-to-equity ratio, dividend payout). Employing partial least squares structural equation modeling (PLS-SEM), our findings revealed that board independence and diversity positively influenced financial performance and risk management. However, board size showed a non-linear relationship with financial outcomes. These results contribute to the ongoing discourse on optimal board structures and their role in enhancing corporate financial governance.

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Published

2024-08-28

Issue

Vol. 13 No. 3 (2024)

Section

Articles