DEVELOPMENT OF BOARD STRUCTURE AND ITS IMPLICATIONS FOR CORPORATE GOVERNANCE EFFECTIVENESS AND FIRM PERFORMANCE
Abstract
Board structure is a fundamental mechanism of corporate governance, yet its relationship to corporate governance effectiveness and firm performance remains theoretically contested and empirically heterogeneous. This article critically reviews the evolution of board structure, from its foundations in organisational design to its contemporary conceptualisation as a multidimensional governance architecture. Board structure is conceptualised across six interrelated dimensions: board size, board independence, board diversity, leadership configuration, director expertise, and board committee arrangements. Recent evidence indicates that these attributes do not have uniform effects on firm performance; rather, their effects depend on institutional, organisational, cultural, ownership, and measurement contexts. The review further argues that board characteristics are unlikely to affect firm performance exclusively through direct relationships. Their influence is more plausibly transmitted through governance processes that encompass monitoring, accountability, transparency, strategic oversight, information processing, risk management, and decision quality. Corporate governance effectiveness is therefore conceptualised as a critical intervening mechanism linking board structure to firm performance. The review identifies persistent conceptual and methodological limitations, including fragmented treatment of board attributes, inconsistent operationalisation, reliance on single-theory explanations, and inadequate attention to institutional context. It concludes that board structure should be understood not as a collection of compliance-oriented attributes but as an integrated governance capability whose effectiveness depends on the configuration and interaction of board characteristics and the institutional environment in which boards operate. This perspective provides a stronger theoretical basis for examining board structure, corporate governance effectiveness, and firm performance, particularly in emerging-market contexts.
Keywords: board structure; corporate governance; board independence; board diversity; board expertise; CEO duality; board committees; firm performance; emerging markets
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