“The Effects of Board composition on Firm Performance”

Abstract

This research study explain the effects of board compositions the effectiveness of the firm performance, especially with the context of Pakistani listed companies in KSE-100. A sample of 55 listed companies at KSE-100 Index has randomly selected. Independent T-Test and group statistic have used for most appropriate measures of the categorical variables of board composition including Dependent board and independent board of directors. Results are not supported all hypothesis. There is no correlation has seen between the greater representation of independent director and firm performance, Firm performance depends on the firm’s internal policies and procedures that improve firm effectiveness and enhance firm performance. In this research, board composition and it impact on firm have measured through three performances, ROE, ROA and Tobin’s Q. All hypotheses have rejected “Firm having independent board composition in their board shows higher Tobin’s Q, ROA and ROE as compare to the firm having dependent board which as a result shows higher firm’s performance. So, it means that the listed companies of Pakistan at KSE-100 with greater representation of independent board of directors have no create major impact on the firm performance.