Corporate Performance and Board Structure in Belgian Companies

Abstract The influence of corporate governance issues on the performance of a company has been discussed for some time, but only empirical evidence can convince people of the importance of these issues for the future. Moreover, the issues until now have largely been placed in an Anglo-Saxon business context, and make no reference to other models, such as continental European, that exist. In this paper, we analysed the composition of the board of directors in a sample of 122 Belgian companies and verified whether this composition has an impact on the performance of the firm, as measured by return on equity and assets. Through statistical calculations, we found evidence that board size and percentage of outside directors are positively related to company size and differ significantly across industries. We also found a significant positive relationship between the number of external directors and return on equity, and where the functions of chairman and chief executive are combined, the return on assets is significantly higher.

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