Board quality index and financial performance relationship

The board of directors is one of the most important bodies of companies in decision making. The members of the board have important effects on firm performance. The ethnicity of board members, whether independent or not, gender diversity and financial expertise greatly affect the company's performance. It has been found that these elements are examined many times in the literature by addressing them separately. However, for the first time, the person who examined and dealt with it is Bin-Sariman. An index was created by Bin-Sariman in 2015 to examine the impact of the members on the board of directors on the company's performance. This index is the Board of Directors Quality Index. In the study, the index formed by Bin-Sariman was used and its effects on firm performance were examined. In this study, it is aimed to determine the effect of Board of Directors Quality Index on financial performance of companies. For this purpose, data of 136 manufacturing industry companies traded on Borsa Istanbul were used. The data set of the study is between 2015 and 2018. It is handled quarterly every year. Dynamic Panel Data Analysis was applied by accessing the data used from the FINNET data distribution system and the Public Disclosure Platform (PDP). The dependent variables used in the analysis are asset profitability (ROA), equity profitability (ROE) and market value / book value (PDDD), and the independent variable is the board quality index (BDQ). Control variables are firm age (FY) and leverage ratio (KO). The Board of Directors Quality Index positively affected the profitability, equity profitability and market value / book value in the Dynamic Panel Data Analysis results. Accordingly, as BDQ increases, ROA, ROE and PD DD increase.