Moderating Effect of Board Capital on the Board Characteristics and Market Performance Relationship: A Case from Manufactirng Sector of Pakistan
Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 8
Abstract
This study is primarily focused to determine the causal effect of board capital over the association among various board attributes like board dependence, CEO duality, managerial share ownership and market performance. Board capital which is usually referred to board incumbents' capabilities to advise and guide company management and also to have a check over their performance, varies among directors. We argue that professionally well-equipped and qualified members not only tend to be better human capital but can supervise and control management more effectively as well. Based on the data of 92 firms from the manufacturing sector of Pakistan listed at Pakistan Stock Exchange we established that stock market performance of firms is negatively affected by board attributes i.e. CEO duality and board dependence. However, this negative effect is restricted by intensity of board capital. We also determined that managerial ownership in the firm enhances its market performance and presence of board capital improves this relationship further. Findings of this study are congruent with the views that board capital in terms of outside directors' qualification and capabilities to exert control over management benefits the business.
Authors and Affiliations
Khalid Hussain, Adnan Ashraf, Nawish Bashir
Keywords
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