Board Tenure: To Limit or Not To Limit?

Sammanfattning: This study investigates the relationship between board tenure and firm performance and how this relationship may be affected by corruption. We use two multivariable regression models on a dataset consisting of firm-year observations from 39 selected countries in different economic and political development stages during 2011-2019. In line with previous literature, our results indicate a positive relationship between board tenure and firm performance until a certain threshold, after which the costs of entrenchment outweigh the positive marginal effect of board learning. Moreover, our results indicate that for firms operating in more corrupt environments, there is a less positive relationship between board tenure length and firm performance than for firms operating in less corrupt environments. To the best of our knowledge, the role of corruption in the relationship between board tenure and firm performance has not been previously investigated. We believe that our study contributes to an increased understanding of how a firm's board of directors can be constructed to improve its effectiveness and how it is affected by the environment in which a firm operates.