The relationship between the structure of the board of directors and firm performance in family versus non-family firms

This paper investigates the impact of four characteristics of the board of directors (board size, board independence, leadership structure and board meetings) on firm performance (Tobin's q). Accordingly, four hypotheses have been developed. The analysis is based on data (objective variables) from 221 firms operating in three countries (Spain, Portugal and Italy) and differentiates between non-family-controlled businesses (NFCBs) and family-controlled businesses (FCBs). Considering the cross-sectional (three countries) and the time series (six years) nature of the data, we used a panel data estimation approach. Our findings show that, although corporate governance recommendations advocate larger, more independent and proactive boards, as well as structures that ensure the separation of the chairperson and CEO roles, these board features do not always result in more effective boards. Indeed, smaller, less independent and less active boards and dual leadership structures are tied to better performance by the FCBs in our sample as compared with the NFCBs.