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Evaluating the sustainable performance of corporate boards: the balanced scorecard approach

Ahmed Hussein Aly (Accounting Department, Faculty of Commerce, Alexandria University, Alexandria, Egypt)
Mohamed Elsayed Mansour (Accounting Department, Faculty of Commerce, Alexandria University, Alexandria, Egypt)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 6 February 2017

3728

Abstract

Purpose

The purpose of this paper is to develop a method for evaluating the sustainable performance of corporate boards using the balanced scorecard approach. Also, the paper aims to determine the need and relevance of the proposed method in the evaluation process by testing the differences in the relative importance of the proposed method measures on a sample of the Egyptian manufacturing companies.

Design/methodology/approach

Data were collected using a questionnaire list and personal interviews with three different population samples: board members, managers of manufacturing companies and financial analysts in brokerage firms. The Wilcoxon signed rank test was used to test the degree of approval on the related questions, and the Kruskal–Wallis test was used to test the differences among the responses of the three samples.

Findings

The results of the statistical analysis indicate that there is a need for companies to have an effective tool to evaluate the board performance, and that the proposed method is a suitable tool for the evaluation. Also, the results indicate that there are differences in the relative importance of the performance measures among the three samples.

Research limitations/implications

The exploratory study focused on a sample of manufacturing companies only. Accordingly, service companies and financial institutions are outside the scope of this research. There was difficulty in accessing a sample of shareholders; instead, this sample was replaced by a group of financial analysts in brokerage firms.

Practical implications

The proposed method adds to the performance evaluation literature with regard to measuring and evaluating the performance of boards. The study provides an empirical evidence of the need to use the balanced scorecard in the board evaluation and its relevance for the evaluation process. It provides a short guide to the most important performance measures to be used in the evaluation process of the company’s board of directors.

Originality/value

Few studies have focused on evaluating the performance of the board of directors using the balanced scorecard. This study is an important attempt to evaluate the sustainable performance of the board of directors using the balanced scorecard by taking into consideration the corporate social responsibility perspective. The proposed board’s balanced scorecard provides a useful tool to evaluate the performance of boards using objective, specific and clear measures.

Keywords

Citation

Aly, A.H. and Mansour, M.E. (2017), "Evaluating the sustainable performance of corporate boards: the balanced scorecard approach", Managerial Auditing Journal, Vol. 32 No. 2, pp. 167-195. https://doi.org/10.1108/MAJ-04-2016-1358

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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