Abstract
Abstract : The relationship between corporate performance and governance practices goes back for centuries yet is still relevant today, in the modern corporate environment. While corporate governance is argued to be an agency cost, as it curbs managers’ self-interest, it is believed to increase company performance as it inspires group effort from all stakeholders. Corporate governance describes the mechanisms in place to ensure that management is taking appropriate steps, policies and procedures to protect every stakeholder’s interest in the company. The study is an investigation on the relationship between corporate governance board of directors and company performance. Board of directors’ characteristics were represented by board size, board independence, Chief Executive Officer (CEO) tenure, CEO compensation and CEO duality while company performance measures were represented by Return on Equity (ROE), Return on Assets (ROA) and Net Profit Margin (NPM). The study used panel regression analysis to estimate a sample of 12 South African public companies in the construction and building materials sector of the Johannesburg Stock Exchange for the period of 2011 to 2016. The size and leverage of a company were considered as control variables. The findings indicated no significant relationship between board independence, board size and CEO duality but did find a direct significant relationship between CEO tenure and CEO remuneration and company performance. The research also found a statistically significant inverse relationship between leverage and company size and performance of the company. This research is a useful aid to the comprehension of board characteristics affecting company performance in South Africa and improving corporate governance principles to eliminate corporate scandals that are crippling economies globally.
M.Com. (Finance)