Skip to main content
SpringerLink
Log in

Effect of Board Diversity and Corporate Governance Structure on Operating Performance: Evidence from the Nepalese Enterprises

  • Chapter
  • First Online:
Business Governance and Society

Abstract

This study examines the effect of board diversity and corporate governance structure on operating performance of Nepalese enterprises. The dependent variables are return on equity (ROE) and market price per share. The independent variables are CEO duality, outside directors, board diversity, board size, board meeting, audit committee, block shareholders, firm size and leverage. The study is based on 20 companies consisting of 10 banking and 10 insurance companies with 100 observations for the period of 2011–2012 to 2015–2016. We collected the data from banking and financial statistics and the Bank Supervision Report published by Nepal Rastra Bank, and the annual reports from the selected Nepalese enterprises. Multiple regression models are estimated to test the significance and importance of board diversity and corporate governance structure on operating performance of Nepalese enterprises.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Abbott, L. J., & Parker, S. (2000). Auditor selection and audit committee characteristics. A Journal of Practice and Theory, 19(2), 47–67.

    Google Scholar 

  • Abdul, R., Haneem, K., & Ali, F. M. (2006). Board, audit committee, culture and earnings management: Malaysian evidence. Managerial Auditing Journal, 1(7), 783–804.

    Article  Google Scholar 

  • Abdullah, S. N. (2004). Board composition, CEO duality and performance among Malaysian listed companies. Corporate Governance, 4(4), 47–61.

    Article  Google Scholar 

  • Abor, J. (2007). Corporate governance and financing decisions of Ghanaian listed firms. The International Journal of Business in Society, 7(1), 83–92.

    Google Scholar 

  • Adams, R. B., & Ferreira, K. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 9(1), 291–309.

    Article  Google Scholar 

  • Adler, R. D. (2001). Women in the executive suite correlate to high profits. Working paper, European project on equal pay, Pepperdine University, USA.

    Google Scholar 

  • Adnan, M. A. (2011). A panel data analysis on the relationship between corporate governance and bank efficiency. Journal of Accounting Finance and Economics, 1(1), 1–15.

    Google Scholar 

  • Agrawal, A., & Mandelker, G. (1990). Large shareholders and the monitoring of managers: The case of anti-takeover charter amendments. Journal of Financial and Quantitative Analysis, 25(2), 143–161.

    Article  Google Scholar 

  • Brickley, J., Coles, L., & Jarrell, G. (1997). Corporate leadership structure: On the separation of the positions of CEO and chairman of the board. Journal of Corporate Finance, 3(3), 189–220.

    Article  Google Scholar 

  • Burke, P. (2000). Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal of Banking and Finance, 13(1), 65–79.

    Article  Google Scholar 

  • Burson, K. (2007). The effect of firm size on profit rates in the financial services. Journal of Economics Education Research, 8(1), 67–81.

    Google Scholar 

  • Cadbury, A. (1992). Report of the committee on the financial aspects of corporate governance. London Gee Publishing, 7(4), 24–50.

    Google Scholar 

  • Carter, D. A., Simkins, J., & Gary, W. (2003). Corporate governance, board diversity, and firm value. Financial Review, 38(1), 33–53.

    Article  Google Scholar 

  • Dalton, D., Daily, C., Ellstrand, A., & Johnson, J. (1998). Meta-analytic review of board composition, leadership structure, and financial performance. Strategic Management Journal, 1(9), 269–290.

    Article  Google Scholar 

  • DrorParnesa, L. (2011). Corporate governance and corporate credit worthiness. Journal of Risk and Financial Management, 2(1), 1–42.

    Google Scholar 

  • Ekwe, M., & Duru, A. (2012). Liquidity management and corporate profitability in Nigeria. ESUT Journal of Accountancy, 3(1), 22–28.

    Google Scholar 

  • Erhardt, P., Niclas, L., Werbel, H., & Shrader, D. (2003). Board of director diversity and firm financial performance. Corporate Governance: An International Review, 9(1), 102–111.

    Article  Google Scholar 

  • Farrell, K. A., & Hersch, P. L. (2005). Additions to corporate boards: The effect of gender. Journal of Corporate Finance, 11(3), 85–106.

    Article  Google Scholar 

  • Ferreira, K. (2010). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 9(4), 291–309.

    Google Scholar 

  • Finch, E. M., & Shivdasani, A. (2006). Are busy boards effective monitors. Journal of Finance, 51(2), 689–724.

    Google Scholar 

  • Fondas, N. (2000). Women on boards of directors: Gender bias or power threat? Issues in Business Ethics, 14(1), 171–177.

    Article  Google Scholar 

  • Gill, A., & Mathur, N. (2011). Board size, CEO duality, and the value of Canadian manufacturing firms. Journal of Applied Finance and Banking, 1(3), 1–13.

    Google Scholar 

  • Guli, S., Sajid, M., Razzaq, N., & Afzal, F. (2012). Agency cost, corporate governance and ownership structures. International Journal of Business and Social Science, 3(9), 268–277.

    Google Scholar 

  • Guragain, S., Karki, S., Koirala, S., Upadhaya, S., & Pant, U. (2016). The effect of board size, board composition and ownership structure on bank performance: A case of Nepalese commercial banks. Nepalese Journal of Finance, 3(1), 104–116.

    Google Scholar 

  • Hill, C., & Jones, G. (2001). Corporate governance, board gender diversity and corporate performance: A critical review of literature. European Scientific Journal, 12(7), 23–45.

    Google Scholar 

  • Javid, A. Y., & Robina, I. (2007). Relationship between corporate governance indicators and firm value: A case study of Karachi Stock Exchange. Retrieved from http://mpra.ub.uni-muenchen.de/2225/MPRA. Paper no. 2225, Posted 07. November 2007/02:20, PIDE Working Papers 2007: 14.

  • Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831–880.

    Article  Google Scholar 

  • Jensen, M. C. (1994). The modern industrial revolution, exist and the failure of internal control system. The Journal of Applied Corporate Finance, 6(4), 1–7.

    Article  Google Scholar 

  • Jensen, M. C., & Meckling, H. W. (1976). Theory of the firm: Managerial behaviour, agency costs and university structure. Journal of Financial Economics, 3(1), 305–360.

    Article  Google Scholar 

  • Johansen, D. (2008). Corporate governance and board accounts: Exploring a neglected interface between boards of directors and management. Journal of Management and Governance, 12(4), 343–380.

    Article  Google Scholar 

  • Johl, S. K., Kaur, S., & Cooper, B. (2015). Board characteristics and firm performance: Evidence from Malaysian public listed firms. Journal of Economics, Business and Management, 3(2), 239–243.

    Article  Google Scholar 

  • Kang, J. K., & Shivdasani, A. (1995). Firm performance, corporate governance, and top executive turnover in Japan. Journal of Financial Economies, 38(1), 29–58.

    Article  Google Scholar 

  • Kang, H., Cheng, M., & Gray, S. J. (2007). Corporate governance and board composition: Diversity and independence of Australian boards. Corporate Governance: An International Review, 15(2), 12–19.

    Google Scholar 

  • Karamanou, I., & Vafeas, N. (2005). The association between corporate boards, audit committees, and management earnings forecasts: An empirical analysis. Journal of Accounting Research, 43(3), 453–486.

    Article  Google Scholar 

  • Kyereboah-Coleman, A. (2008). Corporate governance and firm performance in Africa: A dynamic panel data analysis. Journal of Economics and Econometrics, 32(2), 1–24.

    Article  Google Scholar 

  • Kyereboah-Coleman, A., & Biekpe, N. (2006). Corporate governance and financing choices of firms: A panel data analysis. South African Journal of Economics, 74(4), 670–681.

    Article  Google Scholar 

  • Lama, M. N., Khadka, P., Acharya, P., Maharjhan, K., & Bhandari, R. (2015). Corporate governance and firm performance: Study in Nepalese firms. Nepalese Journal of Corporate Governance, 2(1), 78–92.

    Google Scholar 

  • Lipton, M., & Lorsch, J. (1992). A modest proposal for improved corporate governance. The Business Lawyer, 48(1), 59–77.

    Google Scholar 

  • Majumdar, S. K. (1997). Foreign ownership and profitability: Property rights, control, and the performance of firms in Indian industry. The Journal of Law and Economics, 42(1), 209–238.

    Google Scholar 

  • Mangena, M., & Tauringana, V. (2008). Corporate boards, ownership structure and firm performance in an environment of severe political and economic uncertainty. British Accounting Association Conference, Norton Street, Liverpool, USA.

    Google Scholar 

  • Ntim, C. G. (2009). Internal corporate governance and firm financial performance: Evidence from South African listed firms. Unpublished PhD thesis, University of Glasgow, UK.

    Google Scholar 

  • Nuryanah, S., & Islam, S. (2011). Corporate governance and performance: Evidence from an emerging market. Malaysian Accounting Review, 10(1), 17–42.

    Google Scholar 

  • Peng, M. W., Zhang, S., & Li, X. (2007). CEO duality and firm performance during china’s institutional transitions. Management and Organization Review, 3(2), 205–225.

    Article  Google Scholar 

  • Peni, E., & Vahamaa, S. (2012). Did good corporate governance improve bank performance during the financial crisis? Journal of Financial Services Research, 41(2), 19–35.

    Article  Google Scholar 

  • Pradhan, R. S., & Adhikari, S. N. (2009). Corporate governance and firm performance. Journal of Management Review, 1(1), 22–26.

    Google Scholar 

  • Rhoades, D. L., Rechner, P. L., & Sudramurthy, C. (2001). A meta-analysis of board directorship structure and financial performance: Are two heads better than one? Corporate Governance-An International Review, 9(3), 311–319.

    Article  Google Scholar 

  • Ruin, J. (2001). Essentials of the corporate management. International Journal of Multidisciplinary Sciences and Engineering, 6(2), 34–54.

    Google Scholar 

  • Sami, H., Wang, J., & Zhou, H. (2011). Corporate governance and operating performance of Chinese listed firms. Journal of International Accounting, Auditing and Taxation, 20(2), 106–114.

    Article  Google Scholar 

  • Shah, P., Rai, K., & Shrestha, S. (2013). Impact of corporate governance in financial performance. Nepalese Journal of Management, 1(2), 23–45.

    Google Scholar 

  • Sharma, G., Karki, M., Poudel, M., & Thapa, N. (2014). Role of corporate governance on banks performance: A case of Nepalese bank. Nepalese Journal of Corporate Governance, 1(1), 15–26.

    Google Scholar 

  • Sheikh, N. A., Wang, Z., & Khan, S. (2013). The impact of internal attributes of corporate governance on firm performance evidence from Pakistan. International Journal of Commerce and Management, 23(1), 56–74.

    Google Scholar 

  • Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783.

    Article  Google Scholar 

  • Shleifer, A., & Wolfenson, D. (2002). Investor protection and equity markets. Journal of Financial Economics, 66(1), 3–27.

    Article  Google Scholar 

  • Shrader, C. B., Blackburn, V. B., & Iles, P. (1997). Women in management and firm financial performance: An exploratory study. Journal of Managerial Issues, 9(3), 355–372.

    Google Scholar 

  • Silwal, P. P. (2011). Effects of corporate governance on the performance of Nepalese firms. The International Research Journal of Management Science, 1(1), 35–47.

    Google Scholar 

  • Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2,500 Danish firms. International Journal of Productivity and Performance Management, 5(5), 569–593.

    Article  Google Scholar 

  • Thagunna, K. S., & Poudel, S. (2013). Measuring bank performance of Nepalese banks: A data envelopment analysis (DEA) perspective. International Journal of Economics and Financial Issues, 3(1), 54–56.

    Google Scholar 

  • Thapa, P., Bajagain, R., & Sharma, D. (2013). Corporate governance: Need and significance in Nepalese banking system. Nepalese Journal of Business, 3(1), 15–28.

    Google Scholar 

  • Velnampy, K., & Pratheepkanth, L. (2012). Corporate governance and firm performance: A study of selected listed companies in Sri Lanka. International Journal of Commerce and Management, 23(1), 23–49.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Management, Uniglobe College, Thribhuvan University, Kathmandu, Nepal

    Ritu Kumari Gupta, Rupa Chand, Sabeena Sadaula, Sangita Saud & Sapana Ambai

Authors
  1. Ritu Kumari Gupta
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rupa Chand
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sabeena Sadaula
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Sangita Saud
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Sapana Ambai
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ritu Kumari Gupta .

Editor information

Editors and Affiliations

  1. EGADE Business School, Mexico City, Mexico

    Rajagopal

  2. International Management Institute, Bhubaneswar, India

    Ramesh Behl

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Gupta, R.K., Chand, R., Sadaula, S., Saud, S., Ambai, S. (2019). Effect of Board Diversity and Corporate Governance Structure on Operating Performance: Evidence from the Nepalese Enterprises. In: Rajagopal, Behl, R. (eds) Business Governance and Society. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94613-9_23

Download citation

Publish with us

Policies and ethics

Search

Navigation