Influence of the Independence of Directors and the Combination of CEOs with Chairperson on Firm Value: Evidence from Cote d’Ivoire

Abstract

Many empirical studies have been conducted to test the impact of the characteristics of board of directors on the performance of stock exchange listed companies in developed countries and emerging countries. There are no abundant literature on the impact of independence and Chief Executive Officer (CEO) duality on corporate performance in Cote d'Ivoire. Cote d'Ivoire is a developing country and according the International Monetary Fund (IFM), one of the three biggest economies in West Africa. Analyzes of developed economies are an example for developing economies countries and more a road map for poor countries to the development. However analyzes of the economies of developing or poor countries constitute a diagnostic and motivation to better lead these countries’ economies to the development. The aim of this study is to determine the effect of the board of directors’ characteristics on the performance of non-financial companies in Cote d'Ivoire. In particular, we focused on the analysis of three characteristics: board size, board independence and the duality of the CEO. Our empirical study has been conducted on a sample of 25 non-financial listing companies for a period from 2002 to 2016 using multiple regression analysis. The modeling was carried out after controlling multi-colinearity and correlation test by using the Hausman specific test, heteroskedasticity test. By controlling variables such as firm size, board meeting and leverage, our empirical results show a positive impact of board size on firm’s performance. It is also found that board independence has a negative effect, while CEO duality has a positive effect on financial performance proxied by ROA. However, when performance is measure by ROE, board independence has a positive effect, while CEO duality has a negative effect.

Keywords: Board of Directors, Corporate Performance, Board Size, Board Independence, CEO Duality.

DOI: 10.7176/JESD/12-12-04

Publication date:June 30^th 2021