Board structure, ownership structure and firm performance: A study of New Zealand listed-firms

TLDR

Studies in the U.S., U.K., and Japan have examined corporate governance and ownership effects on firm performance, but results vary due to differing governance systems. The study examines how board structure and ownership patterns influence performance of New Zealand listed firms to broaden the evidence base. The authors analyze a balanced panel of 79 New Zealand listed firms using a Generalised Linear Model to assess governance effects. The analysis confirms a non‑linear relationship, showing that board composition, committees, and managerial ownership positively affect performance, whereas non‑executive directors, female directors, and blockholder ownership negatively impact performance.

Abstract

This paper investigates the role of board structure and the effect of ownership structures on firm performance in New Zealand's listed firms. Several studies, the majority from the U.S., U.K. and Japan, have examined the relationship between corporate governance mechanisms, ownership structure and firm performance. Those studies yielded different results, affected by the nature of the prevailing governance system for each country. Investigating New Zealand's listed firms could enhance the diversity of the growing body of work that examines this relationship. Though the majority of studies only tested a linear relationship between variables, a number of studies have found a non-linear relationship between board structures, ownership structures and firm performance, and this study confirms the non-linear relationship. Using a balanced panel of 79 New Zealand listed firms, this study employs a Generalised Linear Model (GLM) for robustness. The result reveals that board of directors, board committees, and managerial ownership have a positive and significant impact on firm performance. Meanwhile, nonexecutive directors, female directors on the board and blockholder ownership lower New Zealand firm performance.