Corporate law, board practices and value creation: Spanish evidence

Abstract

Previous research suggests that boards of directors influence firm performance due to their role in activities such as strategic design and its implementation. From this perspective, many corporate governance researchers have tried to demonstrate empirically the impact of board characteristics on firm performance in different contexts. In this context, the objective of this work is to disclosure proven relationships between board governance variables and firm performance based on an analysis of relevant studies in Spain. Before a review of the relevant literature, we provide a legal overview of Spanish corporations and an analysis of corporate board practice in Spain (paying special attention to the composition of the boards of directors, the duality of the CEO and Chairman, gender diversity on boards and directors with multiple directorships). Following this, the analysis of the literature was carried out. The results show that in the majority of studies independent directors and CEO/Chairman duality have no relationship with firm performance. However, the proportion of women on the board of directors does show a positive relationship with firm performance. For the variable busy director, no conclusion can be established because the evidence found is scarce. We can conclude, therefore, that as a result of the inconclusive results as well as the scarcity of the study of some aspects for this field of study, further research on the relationship between the board and firm performance is necessary in the Spanish context.