Does Firm Size Moderate the Relationship between Board Characteristics and Financial Performance? Insights from Egypt | ||||
| مجلة الاسکندرية للبحوث المحاسبية | ||||
| Article 13, Volume 9, Issue 2, May 2025, Page 65-118 PDF (1.51 MB) | ||||
| Document Type: المقالة الأصلية | ||||
| DOI: 10.21608/aljalexu.2025.427155 | ||||
 View on SCiNiTO | ||||
| Author | ||||
| Dina Kamal Abdel Salam Ali Hassan | ||||
| Assistant professor, Accounting Department- Faculty of Commerce- Kafr El Sheikh University | ||||
| Abstract | ||||
| Purpose – The first purpose of this paper is to investigate whether board characteristics, in particular board size, board activity and gender diversity, are associated with financial performance in Egyptian banks. The second purpose of this paper is to explore the moderating role of firm size on the relationship between board characteristics and financial performance. Design/methodology/approach – A multiple regression analysis is used to estimate the moderating role of firm size on the relationship between board characteristics and financial performance for a sample of Egyptian banks during the period 2016-2022. Findings – The results indicate that board size has a significant positive impact on return on assets (ROA). However, the results indicate that board size has a negative and insignificant impact on return on equity (ROE). The results demonstrate that gender diversity has a significant positive impact on financial performance as measured by return on assets ROA and ROE. The results also explore that board activity has a positive but insignificant effect on ROA. However, it has a negative and insignificant effect on ROE. Firm size as a moderating variable has a generally positive effect on the relationship between board characteristics and ROA. Research limitations/implications – The study was limited to a sample size of 20 banks in one country, however, it sets the tone for future empirical research on the subject matter. Our study is focused just on Egypt, which limits the generalizability of our findings to other emerging countries. This study provides an avenue for future research in the area of corporate governance and financial performance in other emerging countries, especially other African countries. Practical implications – This study provides useful insights for managers and policymakers to better understand which board characteristics can best encourage a company to improve financial performance. Additionally, regulatory authorities should ensure that banks strictly follow the corporate governance principles to build a strong banking industry capable of achieving economic development. Social implications – Banks will benefit equally from valuable qualities across demographic groupings in society by having females on the board and an appropriate board size. Additionally, if board members are correctly selected, banks with more females and suitable board size can successfully contribute to strengthening financial performance and social welfare of diverse segments of society. A culture of good banking governance must emerge in order to improve bank financial stability and, as a result, greater stability and economic growth. Originality/value – To the best of the researcher knowledge, the study is, perhaps, the first to examine the moderating role of firm size on the relationship between board characteristics and financial performance in Egyptian banks. This study adds to the literature by investigating such an issue in a developing economy that operates in a different context than those in developed countries. | ||||
| Keywords | ||||
| Firm size; Board characteristics; Financial performance; Agency theory; Resource dependence theory | ||||
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