Board characteristics and the financial performance and risk management of companies listed on the Johannesburg Stock Exchange

Abstract

The thesis investigated the relationship between multiple board characteristics and five performance and risk-management indicators. Following criticism against testing for linear relationships when it comes to corporate relationships, the study used binary logistic regression to determine whether relationships exist between the board characteristics and the likelihood that companies will rank as top performers in terms of the respective measures. The research confirmed that a number of characteristics have statistically significant relationships with the financial performance and risk-management measures. These findings are useful for determining which board characteristics a company should focus on, given the specific objectives a company wishes to pursue. However, findings in terms of board characteristics that did not show statistically significant relationships to financial performance and risk management measures are equally useful, as this indicates that those characteristics can be included in a board, if there is a different motivation for doing so, without jeopardising the wellbeing of the company.