Board independence, frequency of meetings and performance

Abstract

Purpose

This study aims to investigate the relationship between board structure and performance from an Islamic point of view.

Design/methodology/approach

Consequently, the researcher developed a multiple linear regression model to investigate the nature of this relationship, whereby return on assets (ROA) was used to measure the performance of listed Islamic Banks in Gulf Cooperation Council, covering the period between 2013 and 2016.

Findings

The results indicated a negative relationship between board structure and the performance of Islamic banks.

Research limitations/implications

Because the current study only used accounting-based performance indicator (ROA), the researcher suggests expanding the framework of this study through the addition of market-based performance indicators such as Tobin’s Q.

Practical implications

Therefore, the researcher recommends that regulators of Islamic banks in the GCC need to develop a set of strict restrictions for the selection of independent members of the board and to minimize the meetings of the board to reduce the cost of preparing information and the information asymmetry, thus improving performance.

Originality/value

This study provides guidelines regarding the appropriate number of independent directors and board meetings that will result in reduced monitoring costs and improved profits.

Citation

Musleh Alsartawi, A. (2019), "Board independence, frequency of meetings and performance", Journal of Islamic Marketing, Vol. 10 No. 1, pp. 290-303. https://doi.org/10.1108/JIMA-01-2018-0017