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The effect of board multiple directorships and CEO characteristics on firm performance: evidence from Palestine

The effect of board multiple directorships and CEO characteristics on firm performance: evidence... The purpose of this study is to empirically examine the effect of board multiple directorships and chief executive officer (CEO) characteristics on firm performance among nonfinancial firms listed on the Palestine Security Exchange (PSE) during the period from 2009 to 2016.Design/methodology/approachBased on 200 observations, this study utilizes panel data to examine the effect of the predictors on firm performance measured by return on assets. The analysis is repeated using the return on equity and two regression methods to evaluate the robustness of the main analysis (pooled regression, and backward stepwise regression analysis).FindingsThe results show that the “busyness” of a CEO reduces their effectiveness and is associated with losses in the companies where they are in charge. On the other hand, the results show that CEO tenure, CEO experience and CEO political connections have a positive effect on corporate performance.Originality/valueThis study is timely given that the practice of multiple directorships is widely common among firms in developing countries. Prior research in Palestine has not investigated the role of multiple directorships and the CEO characteristics on corporate outcomes. This study provides a picture of the potential benefits to firms, policymakers and professional bodies from considering CEO variables. The findings of such an examination can help them to set up suitable policies and enhance the role and the quality of the CEO in firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting in Emerging Economies Emerald Publishing

The effect of board multiple directorships and CEO characteristics on firm performance: evidence from Palestine

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2042-1168
DOI
10.1108/jaee-12-2019-0231
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to empirically examine the effect of board multiple directorships and chief executive officer (CEO) characteristics on firm performance among nonfinancial firms listed on the Palestine Security Exchange (PSE) during the period from 2009 to 2016.Design/methodology/approachBased on 200 observations, this study utilizes panel data to examine the effect of the predictors on firm performance measured by return on assets. The analysis is repeated using the return on equity and two regression methods to evaluate the robustness of the main analysis (pooled regression, and backward stepwise regression analysis).FindingsThe results show that the “busyness” of a CEO reduces their effectiveness and is associated with losses in the companies where they are in charge. On the other hand, the results show that CEO tenure, CEO experience and CEO political connections have a positive effect on corporate performance.Originality/valueThis study is timely given that the practice of multiple directorships is widely common among firms in developing countries. Prior research in Palestine has not investigated the role of multiple directorships and the CEO characteristics on corporate outcomes. This study provides a picture of the potential benefits to firms, policymakers and professional bodies from considering CEO variables. The findings of such an examination can help them to set up suitable policies and enhance the role and the quality of the CEO in firms.

Journal

Journal of Accounting in Emerging EconomiesEmerald Publishing

Published: Sep 25, 2020

Keywords: Multiple directorships; Busy CEO; CEO tenure; CEO financial experience; CEO political connection

References