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Board composition and firm performance: empirical evidence from Indian companies

Archana Goel (Chitkara Business School, Chitkara University, Punjab, India)
Rahul Dhiman (Dr Yashwant Singh Parmar University of Horticulture and Forestry, Solan, India)
Sudhir Rana (College of Healthcare Management and Economics, Gulf Medical University, Ajman, United Arab Emirates)
Vimal Srivastava (Mahindra and Mahindra (Ltd), Swaraj Division, Mohali, India)

Asia-Pacific Journal of Business Administration

ISSN: 1757-4323

Article publication date: 26 January 2022

Issue publication date: 22 November 2022




This study aims to know whether board composition is effective in improving firm performance and particularly to determine whether this relationship varies across different levels of performance, that is, companies with very low performance, low performance, moderate performance, high performance and very high performance.


The authors use a data set covering 213 Indian companies registered on S&P Bombay Stock Exchange 500 Index over the period 2001 to 2019 by using Tobin's Q as a performance parameter. The study applies the quantile regression technique and compares the results with fixed effect generalized least squares (GLS) regression.


The findings reveal that board size positively affects the company's performance across all quantiles. Independent directors negatively impact the performance of companies across all quantiles. However, the strength of these relationships increases with increase in performance, thereby supporting agency theory and stewardship theory, respectively. The effect of executive directors on the performance of the companies varies across quantiles. The effect is adverse at moderate and high quantiles only.

Practical implications

The findings provide some grounds for regulators to exercise caution while designing board composition guidelines, keeping in mind the unique internal environment of each company which ultimately affects their performance levels. Similarly, Indian companies are also suggested to compose their boards keeping in mind their performance levels.


The study contributes towards the debate on the board composition and firm performance relationship by adding to the agency theory and stewardship theory that all the companies cannot have the similar board composition. Rather its composition depends upon the performance levels of the companies.



Goel, A., Dhiman, R., Rana, S. and Srivastava, V. (2022), "Board composition and firm performance: empirical evidence from Indian companies", Asia-Pacific Journal of Business Administration, Vol. 14 No. 4, pp. 771-789.



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