The effects of board characteristics on firm performance

In today's world, publicly traded companies are expected to adopt strong corporate governance principles, making them sustainable, resilient, and human-centered organizations. Stakeholders' demands in this regard have further increased the importance of boards of directors, a critical component of corporate governance, and have highlighted the human and social capital of these boards. However, previous studies examining the effects of boards of directors on firm performance have typically focused on one or a few characteristics of the boards. Additionally, the financial and sustainability performance of companies has often been studied separately. This study proposes an integrated approach to measure the impact of board characteristics on firm performance. In developing this approach, which represents the distinctive contribution of the thesis, different perspectives from agency theory, stewardship theory, resource dependence theory, institutional theory, and social capital literature have been utilized, focusing on the boards' functions in guiding strategy, accessing resources, and controlling operations. The empirical research was conducted using data from 265 non-financial companies listed on the Borsa Istanbul (BIST) in 2022. In the study, variables representing the composition, human capital, and social capital of boards of directors were categorized. Multiple regression analyses were conducted using SPSS 25 software to determine the impact of these variables on financial performance and sustainability performance. The findings of the study show that the effects of board composition and elements of social capital on sustainability performance are stronger than those on financial performance. In this context, it has been observed that the political, bureaucratic, and academic ties of boards positively contribute to sustainability performance, while the concentration of power has a negative impact. The representation of women on the board was found to positively influence return on assets and sustainability performance, although the presence of independent female members was observed to reduce return on assets. Postgraduate education level and international experience were found to have a positive impact on sustainability performance. CEO duality and the involvement of family members in the board had a positive effect on return on equity, which represents an important finding in the context of Turkey. This research identifies the factors that influence firms' financial and sustainability performance and contributes to the literature by proposing an integrated approach.