Work

Board systems, employee representation, and neo‐institutional theory: The moderating effect of economic freedom on corporate boards and financial performance

Year: 2022

Type: article

Abstract: This study assesses the relative financial performance of firms operating in an environment in which economic freedom is protected by effective institutions. To do this, we examine the moderating effect of economic freedom on the relationship between board structure and financial performance. Using longitudinal data across 30 European countries, we find that firms with a one‐tier board consistently outperform those with a two‐tier board, but the relative underperformance of two‐tier boards is partially mitigated by the inclusion of employee representatives. The positive influence of employee representatives on the performance of firms with two‐tier boards is bolstered by greater economic freedom.

Source: Managerial and Decision Economics

DOI: 10.1002/mde.3638

Authors: Naz Sayari, Bill Marcum

Institution: Wake Forest University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,750