Boards of Directors and Firm Performance: Is There an Expectations Gap?

By Niamh M. Brennan. 2006

241 citations recorded by the source corpus.

Reflecting investor expectations, most prior corporate governance research attempts to find a relationship between boards of directors and firm performance. This paper critically examines the premise on which this research is based. An expectations gap approach is applied for the first time to implicit expectations which assume a relationship between firm performance and company boards. An expectations gap has two elements: a reasonableness gap and a performance gap. Seven aspects of boards are identified as leading to a reasonableness gap. Five aspects of boards are identified as leading to a performance gap. The paper concludes by suggesting avenues for empirically testing some of the concepts discussed in this paper.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/988cfb78fd37bb8967dd77e09cce3c20844b8f02

How researchers see this paper

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In Accounting

1. Aila Virtanen
2. Afzalur Rashid
3. O. Uadiale

In Strategy and Management

1. Aila Virtanen
2. Afzalur Rashid
3. O. Uadiale

Citations in the corpus

• Board Composition and Firm Performance: Evidence from Bangladesh (2010, unknown): “The board is considered to be a primary internal corporate governance mechanism (Brennan, 2006), as the board monitors and supervises management, and gives management strategic guidelines.”
• The Impact of Board Structure on Corporate Financial Performance in Nigeria (2010, background): “The Journal of Business, 76, 3, 455-475 Brennan, N. (2006). Boards of Directors and Firm Performance: is there an expectations gap? Corporate Governance: An International Review, 14, 6, 577-593”
• Women on the boards of listed companies: Evidence from Finland (2010, background): “There has been a growing interest in gender issues within corporate governance research (Brennan 2006; Brennan and Solomon 2008; Collier 2008; Farrell and Hersch 2005; Huse et al. 2009; Sealy and Singh 2006; Terjesen and Singh 2008).”
• Board independence and firm performance: Evidence from Bangladesh (2018, background): “Corporate boards are the primary and dominant internal corporate governance mechanism and play a key role in monitoring management and aligning the interests of shareholders with management (Brennan, 2006; Rose, 2005).”
• Revisiting Agency Theory: Evidence of Board Independence and Agency Cost from Bangladesh (2015, background): “porate governance mechanism that may be able to check the management’s actions to promote shareholders’ interest (Brennan 2006).”