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Year 2020, Volume: 2 Issue: 1, 1 - 17, 30.10.2020

Abstract

References

  • Abdullah, S. N., K. N. I., Ismail, and L. Nachum, (2012): “Women on Board of Malaysian Firms: Impact on Market and Accounting Performance”, available at papers.ssrn.com/sol3/papers.cfm?abstract_id=2145007.
  • Adams, B. R. and H. Mehran, (2012): “Bank Board Structure and Performance: Evidence for Large Bank Holding Companies”, Journal of Financial Intermediation, 21, 243 – 267.
  • Adams, R. and D. Ferreira, (2009): “Women in the Boardroom and Their Impact on Governance and Performance”, Journal of Financial Economics, 94, 2, 291 – 309.
  • Agoraki, M. E., M. D. Delis, and P. Staikouras, (2009): “The Effect of Board Size and Composition on Bank Efficiency”, MPRA Paper.
  • Aladwan, M. S. (2015). The Impact of Bank Size on Profitability “An Empirical study o Listed Jordanian Commercial Banks”. European Scientific Journal. 11(34). 217-235.
  • Andres, P. and T. Allelado, (2008), “Corporate Governance in Banking: The Role of the Board of Directors”, Journal of Banking and Finance, 32, 12, 2570 – 2580.
  • Arellano, M. and S. Bond (1991): “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations”, Review of Economic Studies, 58, 277–97.
  • Athanasoglou, P. P., Brissimis, S. and Delis, M. D. (2008). Bank-Specific, Industry Specific and Macroeconomic Determinants of Bank Profitability. Journal of International Financial Markets Institutions and Money. 18(2). 121-136.
  • Azmi, I. A. G. and M. A. Barrett, (2013): “Women on Boards and Company Financial Performance: A Study of Malaysian Smes”, Proceedings of 3rd Global Accounting, Finance and Economics Conference, Rydges Melbourne, Australia, 23-8.
  • Baltagi, B. H., (2008): “Econometric Analysis of Panel Data Fourth Edition”, Wiley, New York.
  • Belkhir, M. (2009): "Board of Directors' Size and Performance in the Banking Industry", International Journal of Managerial Finance, 5(2), 201 – 221.
  • Blundell, R. and Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143.
  • Booth, J. R., M. M. Cornett and H. Tehranian, (2002): “Boards of Directors, Ownership, and Regulation”, Journal of Banking and Finance, 26, 1973-1996.
  • Caner, B. D. and C. Dincer, (2013): “Corporate Governance and Market Value: Evidence from Turkish Banks”, International Journal of Academic Research in Business and Social Sciences, 3, 1, 241 – 249.
  • Caprio, G. J. and R., Levine, (2002): “Corporate Governance of Banks: Concepts and International Observations” Working Paper, World Bank.
  • Carter, D.A., B.J., Simkins and W.G. Simpson, (2003): “Corporate Governance, Board Diversity and Firm Value”, The Financial Review, 38, 1, 33 – 53.
  • Carter, D.A., F.P. D’Sauza, B.J., Simpkins, and W.G., Simpsons, (2008): “The Diversity of Corporate Board Committees and Financial Performance”, available at ssrn: http://ssrn.com/abstract=1106698.
  • Demsetz, R., Saidenberg, M. R. Saidenberg and P. E. Strahan, (1997): “Agency Problems and Risk Taking at Banks”, Working Paper, Federal Reserve Bank of New York.
  • Dezso, C.L. and D.G. Ross, (2008): “Girl Power, Female Participation in Top Management and Firm Performance”, Robert H. Smith School Research Paper, available at ssrn: http://ssrn.com/abstract=1088182.
  • Doğan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
  • Doğan, M. and F. Yıldız, (2013): “The Impact of the Board of Directors’ Size on the Bank’s Performance: Evidence from Turkey”, European Journal of Business and Management, 5(6), 130-140.
  • Donaldson, L. and J. H., Davis, (1991): “Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns”, Australian Journal of Management, 16(1), 49–64.
  • Donaldson, T. and L. E. Preston, (1995): “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications”, Academy of Management Review, 20, 1, 65 – 91.
  • Fama, E. & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-25.
  • Farrell, K. A. and P. L. Hersch, (2005): “Additions to Corporate Boards: The Effect of Gender”, Journal of Corporate Finance, 11, 85–206.
  • Francis, B., I., Hasan and Q., Wu, (2012): “Do Corporate Boards Affect Firm Performance? New Evidence from the Financial Crisis”, Working Paper, <http://ssrn.com/ abstract=2041194> (viewed 14.05.129).
  • Holm, C. and F. Scholer, (2010): “Reduction of Asymmetric Information Through Corporate Governance Mechanisms – The Importance of Ownership Dispersion and Exposure Toward the International Capital Market”, Corporate Governance: An International Review, 18, 32 – 47.
  • Im, K.S., M.H. Pesaran and Y. Shin (2003): “Testing for Unit Roots in Heterogeneous Panels”, Journal of Econometrics, 115, 53-74.
  • Işık, Ö and İnce, A. R. (2016). Board Size, Board Composition and Performance: An Investigation on Turkish Banks, International Business Research, 9(2), 74-84.
  • Isik, Ö., Aydin Unal, E. and Ünal, Y. (2017). The Effect of Firm Size on Profitability: Evidence from Turkish Manufacturing Sector. Journal of Business, Economics and Finance. 6(4). 301-308. Jensen, M., (1993): “The modern Industrial Revolution, Exit, and the Failure of Internal Control Systems”, Journal of Finance, 48, 831–880.
  • Jensen, M. C. and Meckling, W. H. (1976). ‘Theory of the firm: managerial behavior, agency costs, and ownership structure’. Journal of Financial Economics, 3 (4), 305-360.
  • Kawshala, H. and Panditharathna, K. (2017). The Factors Affecting on Bank Profitability. International Journal of Scientific and Research Publications, 7(2), 212-2016.
  • Kılıc, M. (2015). The Effect of Board Diversity on the Performance of Banks: Evidence from Turkey. International Journal of Business and Management. 10(9), 182- 192.
  • Kiel, G. C. and G. J. Nicholson, (2003): “Board Composition and Corporate Performance: How the Australian Experience Informs Contrasting Theories of Corporate Governance”, Corporate Governance: An International Review, 11(3), 189-205.
  • Levin, A., C.F. Lin and C.S.J. Chu (2002): “Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties”, Journal of Econometrics, 108, 1-24.
  • Medley, B. (2016). The Relationship between Bank Size and Profitability. Main Street Views. Policy Insights from the Kansas City Fed. Retrieved from https://www.kansascityfed.org/publications/ten/articles/2016/fall/bank_size on July, 2020. Misha, S.C. and J. F. Nielsen, (2000): “Board Independence and Compensation Policies in Large Bank Holding Companies”, Financial Management, 51-70.
  • Morinova, J., J. Plantenga and C., Remery, (2010): “Gender Diversity and Firm Performance: Evidence from Dutch and Danish Boardrooms”, Discussion Paper, Utrecht School of Economics.
  • Nicholson, G.J. and Kiel, G.C. (2003). Board Composition and Corporate Performance: How The Australian Experience Informs Contrasting Theories of Corporate Governance. Corporate Governance: An International Review, 11(3):189-205.
  • Nickel, S.J. (1981): “Biases in Dynamic Models with Fixed Effects”, Econometrica, 49, 1417–1426.
  • Ozatac, N. (2011): “Gender Diversity in Board of Directors and Top Management: The Case of Turkish Banks”, Actual Problems of Economics, 115, 1, 341 – 352.
  • Patton, A. and J. Baker, (1987): “Why Won’t Directors Rock the Boat?”, Harvard Business Review, 65, 10–18.
  • Pathan, S. and R. Faff, (2013): “Does Board Structure in Banks Really Affect Their Performance?”, Journal of Banking and Finance, 37, 5, 1573 – 1589.
  • Pathan, S., M. Skully and J. Wickramanayake (2007): “Board Size, Independence and Performance: An Analysis of Thai Banks”, Asia-Pacific Financial Markets, 14, 211-227.
  • Robinson, G. and K., Dechant, (1997): “Building a Business Case for Diversity”, Academy of Management Executive, 11, 21–30.
  • Rose, C., (2007): “Does Female Board Representation Influence Firm Performance? The Danish Evidence”, Corporate Governance, 15, 2, 404-413.
  • Shleifer, A. and R. W. Vishny, (1997): “A Survey of Corporate Governance”, The Journal of Finance, 52, 2, 737 – 783.
  • Smith, N., Smith, V., and M. Verner, (2006): “Do Women in Top Management Affect Firm Performance? A Panel Study of 2,500 Danish Firms”, International Journal of Productivity and Performance Management, 55, 7, 569- 593.
  • Selekler-Goksen, N., and A. Karatas, (2008): “Board Structure and Performance in an Emerging Economy: Turkey”, International Journal of Business and Ethics, 4, 2, 132–147. Staikouras, P., C. Staikouras, and M.E. Agoraki, (2007): “The Effect of Board Size and Composition on European Bank Performance”, European Journal of Law and Economics, 23, 1-27.
  • Virtanen, A., (2012): “Women on Boards of Listed Companies: Evidence from Finland”, Journal of Managing Governance, 16, 571-593.
  • Yağlı, İ. (2019). Yönetim Kurulu Çeşitliliği – Finansal Performans İlişkisi: Türk Bankacılık Sektörü Örneği. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 37(3), 565-585.
  • Yermack, D., (1996): “Higher Market Valuation of Companies with a Small Board of Directors”, Journal of Financial Economics, 40, 185 – 221.

BANK PERFORMANCE AND BOARD STRUCTURE: EVIDENCE FROM TURKEY

Year 2020, Volume: 2 Issue: 1, 1 - 17, 30.10.2020

Abstract

This paper examines the impact of board structure on financial performances of the 14 publicly traded commercial banks operating in Turkey over the period 2007 to 2019. Board structure variables are board size, proportion of independent directors in the board, and the proportion of women directors in the board. I used dynamic panel data analysis and estimated the parameters of the regression equation using the two-step generalized methods of moment (GMM) method. Results of the regression analyses show that while board size and proportion of independent directors in the board have significant and positive impacts on banks’ financial performance, proportion of independent directors in the board does not have a significant impact on banks’ financial performance. As the policy implications, banks should increase the number of independent directors in the board; however, it is difficult to explain the significance of gender diversity in the board as the number of women in the boards is very low for the given sample of banks.

References

  • Abdullah, S. N., K. N. I., Ismail, and L. Nachum, (2012): “Women on Board of Malaysian Firms: Impact on Market and Accounting Performance”, available at papers.ssrn.com/sol3/papers.cfm?abstract_id=2145007.
  • Adams, B. R. and H. Mehran, (2012): “Bank Board Structure and Performance: Evidence for Large Bank Holding Companies”, Journal of Financial Intermediation, 21, 243 – 267.
  • Adams, R. and D. Ferreira, (2009): “Women in the Boardroom and Their Impact on Governance and Performance”, Journal of Financial Economics, 94, 2, 291 – 309.
  • Agoraki, M. E., M. D. Delis, and P. Staikouras, (2009): “The Effect of Board Size and Composition on Bank Efficiency”, MPRA Paper.
  • Aladwan, M. S. (2015). The Impact of Bank Size on Profitability “An Empirical study o Listed Jordanian Commercial Banks”. European Scientific Journal. 11(34). 217-235.
  • Andres, P. and T. Allelado, (2008), “Corporate Governance in Banking: The Role of the Board of Directors”, Journal of Banking and Finance, 32, 12, 2570 – 2580.
  • Arellano, M. and S. Bond (1991): “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations”, Review of Economic Studies, 58, 277–97.
  • Athanasoglou, P. P., Brissimis, S. and Delis, M. D. (2008). Bank-Specific, Industry Specific and Macroeconomic Determinants of Bank Profitability. Journal of International Financial Markets Institutions and Money. 18(2). 121-136.
  • Azmi, I. A. G. and M. A. Barrett, (2013): “Women on Boards and Company Financial Performance: A Study of Malaysian Smes”, Proceedings of 3rd Global Accounting, Finance and Economics Conference, Rydges Melbourne, Australia, 23-8.
  • Baltagi, B. H., (2008): “Econometric Analysis of Panel Data Fourth Edition”, Wiley, New York.
  • Belkhir, M. (2009): "Board of Directors' Size and Performance in the Banking Industry", International Journal of Managerial Finance, 5(2), 201 – 221.
  • Blundell, R. and Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143.
  • Booth, J. R., M. M. Cornett and H. Tehranian, (2002): “Boards of Directors, Ownership, and Regulation”, Journal of Banking and Finance, 26, 1973-1996.
  • Caner, B. D. and C. Dincer, (2013): “Corporate Governance and Market Value: Evidence from Turkish Banks”, International Journal of Academic Research in Business and Social Sciences, 3, 1, 241 – 249.
  • Caprio, G. J. and R., Levine, (2002): “Corporate Governance of Banks: Concepts and International Observations” Working Paper, World Bank.
  • Carter, D.A., B.J., Simkins and W.G. Simpson, (2003): “Corporate Governance, Board Diversity and Firm Value”, The Financial Review, 38, 1, 33 – 53.
  • Carter, D.A., F.P. D’Sauza, B.J., Simpkins, and W.G., Simpsons, (2008): “The Diversity of Corporate Board Committees and Financial Performance”, available at ssrn: http://ssrn.com/abstract=1106698.
  • Demsetz, R., Saidenberg, M. R. Saidenberg and P. E. Strahan, (1997): “Agency Problems and Risk Taking at Banks”, Working Paper, Federal Reserve Bank of New York.
  • Dezso, C.L. and D.G. Ross, (2008): “Girl Power, Female Participation in Top Management and Firm Performance”, Robert H. Smith School Research Paper, available at ssrn: http://ssrn.com/abstract=1088182.
  • Doğan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
  • Doğan, M. and F. Yıldız, (2013): “The Impact of the Board of Directors’ Size on the Bank’s Performance: Evidence from Turkey”, European Journal of Business and Management, 5(6), 130-140.
  • Donaldson, L. and J. H., Davis, (1991): “Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns”, Australian Journal of Management, 16(1), 49–64.
  • Donaldson, T. and L. E. Preston, (1995): “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications”, Academy of Management Review, 20, 1, 65 – 91.
  • Fama, E. & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-25.
  • Farrell, K. A. and P. L. Hersch, (2005): “Additions to Corporate Boards: The Effect of Gender”, Journal of Corporate Finance, 11, 85–206.
  • Francis, B., I., Hasan and Q., Wu, (2012): “Do Corporate Boards Affect Firm Performance? New Evidence from the Financial Crisis”, Working Paper, <http://ssrn.com/ abstract=2041194> (viewed 14.05.129).
  • Holm, C. and F. Scholer, (2010): “Reduction of Asymmetric Information Through Corporate Governance Mechanisms – The Importance of Ownership Dispersion and Exposure Toward the International Capital Market”, Corporate Governance: An International Review, 18, 32 – 47.
  • Im, K.S., M.H. Pesaran and Y. Shin (2003): “Testing for Unit Roots in Heterogeneous Panels”, Journal of Econometrics, 115, 53-74.
  • Işık, Ö and İnce, A. R. (2016). Board Size, Board Composition and Performance: An Investigation on Turkish Banks, International Business Research, 9(2), 74-84.
  • Isik, Ö., Aydin Unal, E. and Ünal, Y. (2017). The Effect of Firm Size on Profitability: Evidence from Turkish Manufacturing Sector. Journal of Business, Economics and Finance. 6(4). 301-308. Jensen, M., (1993): “The modern Industrial Revolution, Exit, and the Failure of Internal Control Systems”, Journal of Finance, 48, 831–880.
  • Jensen, M. C. and Meckling, W. H. (1976). ‘Theory of the firm: managerial behavior, agency costs, and ownership structure’. Journal of Financial Economics, 3 (4), 305-360.
  • Kawshala, H. and Panditharathna, K. (2017). The Factors Affecting on Bank Profitability. International Journal of Scientific and Research Publications, 7(2), 212-2016.
  • Kılıc, M. (2015). The Effect of Board Diversity on the Performance of Banks: Evidence from Turkey. International Journal of Business and Management. 10(9), 182- 192.
  • Kiel, G. C. and G. J. Nicholson, (2003): “Board Composition and Corporate Performance: How the Australian Experience Informs Contrasting Theories of Corporate Governance”, Corporate Governance: An International Review, 11(3), 189-205.
  • Levin, A., C.F. Lin and C.S.J. Chu (2002): “Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties”, Journal of Econometrics, 108, 1-24.
  • Medley, B. (2016). The Relationship between Bank Size and Profitability. Main Street Views. Policy Insights from the Kansas City Fed. Retrieved from https://www.kansascityfed.org/publications/ten/articles/2016/fall/bank_size on July, 2020. Misha, S.C. and J. F. Nielsen, (2000): “Board Independence and Compensation Policies in Large Bank Holding Companies”, Financial Management, 51-70.
  • Morinova, J., J. Plantenga and C., Remery, (2010): “Gender Diversity and Firm Performance: Evidence from Dutch and Danish Boardrooms”, Discussion Paper, Utrecht School of Economics.
  • Nicholson, G.J. and Kiel, G.C. (2003). Board Composition and Corporate Performance: How The Australian Experience Informs Contrasting Theories of Corporate Governance. Corporate Governance: An International Review, 11(3):189-205.
  • Nickel, S.J. (1981): “Biases in Dynamic Models with Fixed Effects”, Econometrica, 49, 1417–1426.
  • Ozatac, N. (2011): “Gender Diversity in Board of Directors and Top Management: The Case of Turkish Banks”, Actual Problems of Economics, 115, 1, 341 – 352.
  • Patton, A. and J. Baker, (1987): “Why Won’t Directors Rock the Boat?”, Harvard Business Review, 65, 10–18.
  • Pathan, S. and R. Faff, (2013): “Does Board Structure in Banks Really Affect Their Performance?”, Journal of Banking and Finance, 37, 5, 1573 – 1589.
  • Pathan, S., M. Skully and J. Wickramanayake (2007): “Board Size, Independence and Performance: An Analysis of Thai Banks”, Asia-Pacific Financial Markets, 14, 211-227.
  • Robinson, G. and K., Dechant, (1997): “Building a Business Case for Diversity”, Academy of Management Executive, 11, 21–30.
  • Rose, C., (2007): “Does Female Board Representation Influence Firm Performance? The Danish Evidence”, Corporate Governance, 15, 2, 404-413.
  • Shleifer, A. and R. W. Vishny, (1997): “A Survey of Corporate Governance”, The Journal of Finance, 52, 2, 737 – 783.
  • Smith, N., Smith, V., and M. Verner, (2006): “Do Women in Top Management Affect Firm Performance? A Panel Study of 2,500 Danish Firms”, International Journal of Productivity and Performance Management, 55, 7, 569- 593.
  • Selekler-Goksen, N., and A. Karatas, (2008): “Board Structure and Performance in an Emerging Economy: Turkey”, International Journal of Business and Ethics, 4, 2, 132–147. Staikouras, P., C. Staikouras, and M.E. Agoraki, (2007): “The Effect of Board Size and Composition on European Bank Performance”, European Journal of Law and Economics, 23, 1-27.
  • Virtanen, A., (2012): “Women on Boards of Listed Companies: Evidence from Finland”, Journal of Managing Governance, 16, 571-593.
  • Yağlı, İ. (2019). Yönetim Kurulu Çeşitliliği – Finansal Performans İlişkisi: Türk Bankacılık Sektörü Örneği. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 37(3), 565-585.
  • Yermack, D., (1996): “Higher Market Valuation of Companies with a Small Board of Directors”, Journal of Financial Economics, 40, 185 – 221.
There are 51 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Güneş Topçu 0000-0001-8810-8945

Publication Date October 30, 2020
Submission Date August 24, 2020
Acceptance Date September 6, 2020
Published in Issue Year 2020 Volume: 2 Issue: 1

Cite

APA Topçu, G. (2020). BANK PERFORMANCE AND BOARD STRUCTURE: EVIDENCE FROM TURKEY. Management and Political Sciences Review, 2(1), 1-17.


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