An investigation of the relationship between board members' characteristics and perpormance of firms listed at the Istanbul Stock Exchange

The Cadbury Report (1992), a pioneer in outlining the financial aspects of corporate governance, was the first to put the spotlight on corporate boards of directors. Around the same time, academic work started to gain impetus with the Hermalin and Weisbach (1991) study. Soon after, other studies followed suit in many developed and developing markets, to investigate the effects of board structure, size, duality (the Chairperson and the CEO positions held by the same board member), and number of independent board members on firm performance. However, the unavailability of data in an electronically downloadable format made it impossible to analyse the effects of more detailed information on board members, such as the university they graduated from or their previous work experience.In order to fill this gap in the literature, this study explicitly asks the question of whether there is a relationship between corporate board members? characteristics and firm performance. To fulfill this objective, data for the year 2010 is collected for all firms listed at the Istanbul Stock Exchange (ISE), including detailed data for 2,851 board members, and analysed in a logistic regression framework.Findings show that, as the percentage traded and board size increase, performance decreases. Additionally, there is a positive influence on firm performance if the board member previously worked in a different sector. Interestingly, board members who have an undergraduate degree from Ankara University are found to perform better than their peers with degrees from Boğaziçi University and Istanbul University. However, board members? age, gender and tenure do not seem to have a significant effect on firm performance. Findings should be construed in the light of endogeneity and cross-sectional data issues.