The effect of corporate boards on financial performance: Empirical evidence from Bangladeshi listed pharmaceutical companies

Abstract

This fact-finding research aims to explore how corporate boards impacted the financial performance of publicly listed pharmaceutical companies in Bangladesh from 2007 to 2020 by focusing on the following characteristics: board size, board independence, women on the board, and board meetings. On the other hand, ROA, ROE, and TQ are used as the proxies of financial performance. Fixed and random effect regression models have been used to test the study hypothesis and meet its objective. The researchers finally implemented the Dynamic Ordinary Least Square (DOLS) method for estimating the long-term impacts on dependent variables. The study confirmed that BSIZE has a substantial negative effect on ROA, ROE, and TQ, whereas board independence has a notable beneficial impact on ROA and ROE. The study also shows that the ROA and TQ are significantly and favorably impacted by having women on board. Finally, ROA is negatively and significantly impacted by the frequency of BMEET.The study greatly contributes to the literature on corporate boards' affinity with firm performance. This study also offers academic support for governance reforms now being assessed by policymakers, investors, governments, international organizations, other stakeholders, and the general public. The research contributes to the growing body of knowledge on the connection between corporate boards and the firm performance of Bangladeshi pharmaceutical companies. This study focuses only on DSE-listed pharmaceutical companies in Bangladesh but excludes unlisted companies as financial and non-financial information about those companies needs to be accurately available.