Abstract:
This study explores the relationship between firm performance and both board size and board
composition for a sample of quoted KSE -100 firms using three alternative performance measures: ROE,
Tobin’s Q, and ROA. A sample of 60 listed companies at Karachi stock exchange KSE-100 index was
randomly selected. A regression Analysis was used as most appropriate measures of the variable board
composition and board size. Researcher find evidence that: (i) board size exhibits a significant
negatively association with firm performance, (ii) a positive and significant association between firm
performance and the percentage of independent directors on the board is apparent.
The key statistically significant results are as follows. First, board size exhibits a significant negatively
association with firm performance (Using ROE, ROA, Tobin’s Q. The findings provide evidence that the
market seems to have a preference for small board size.
Based on results and analysis it is concluded that companies having independent directors in their board
composition will show greater firm performance and positively associated with the firm performance.
Results showed that the listed companies of Pakistan Stock Exchange, which have independent board
members in their board, were showing greater return on assets (ROA), ROE and Tobin’ Q.
