Does Board Structure Impact Financial Performance and Corporate Risk?

Detta är en D-uppsats från Handelshögskolan i Stockholm/Institutionen för finansiell ekonomi

Sammanfattning: This paper examines the impact of board structure, in terms of board size and board gender diversity, on financial performance and corporate risk in Sweden. The study uses data on firms listed on Nasdaq Stockholm between 2014 and 2018. By running various regressions, our analysis indicates that board structure does have a significant effect on a company's financial performance and risk-taking. The empirical evidence shows a positive relationship between board size and financial performance, which when moderated for firm size, indicated a less pronounced effect for bigger firms. The results also indicate a negative relationship between board size and corporate risk. Furthermore, the analysis exhibits a negative correlation between board gender diversity and risk, which under the purview of firm size, shows a less pronounced effect for larger companies. However, board gender diversity fails to show any effect on the firm's financial performance. Hence, an important takeaway from this paper is that board gender diversity can be used to minimize corporate risks without negatively affecting corporate performance. This research gives a theoretical and practical insight into the corporate governance mechanisms, like board structure and composition, that can be used as tools in order to mitigate unnecessary risks and facilitate firm performance.

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