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Board of directors and financial decisions of Tunisian firms

Board of directors and financial decisions of Tunisian firms The board of directors constitutes an internal mechanism of governance whose effectiveness has an impact on the creation of a firm value. Its influence on the financial performance of the firm is the subject of advanced researches. However, the study of its impact on the strategic decisions taken by financial direction is less covered. The objective of this article is to study the impact of the board of directors on the financial decisions taken by Tunisian enterprises. From the econometric tests applied to Tunisian data of panel in the period between 1999 and 2005, the present study shows that the board of directors of firms does not constitute an effective tool of control in order to orient financial decisions to the interest of shareholders. This corroborates the entrenchment theory hypothesis and rejects the arguments of the agency theory. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png African Journal of Accounting, Auditing and Finance Inderscience Publishers

Board of directors and financial decisions of Tunisian firms

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
2046-8083
eISSN
2046-8091
DOI
10.1504/AJAAF.2012.046129
Publisher site
See Article on Publisher Site

Abstract

The board of directors constitutes an internal mechanism of governance whose effectiveness has an impact on the creation of a firm value. Its influence on the financial performance of the firm is the subject of advanced researches. However, the study of its impact on the strategic decisions taken by financial direction is less covered. The objective of this article is to study the impact of the board of directors on the financial decisions taken by Tunisian enterprises. From the econometric tests applied to Tunisian data of panel in the period between 1999 and 2005, the present study shows that the board of directors of firms does not constitute an effective tool of control in order to orient financial decisions to the interest of shareholders. This corroborates the entrenchment theory hypothesis and rejects the arguments of the agency theory.

Journal

African Journal of Accounting, Auditing and FinanceInderscience Publishers

Published: Jan 1, 2012

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