TY - JOUR
T1 - Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
AU - Elmagrhi, Mohamed H.
AU - Ntim, Collins G.
AU - Malagila, John
AU - Fosu, Samuel
AU - Tunyi, Abongeh A.
N1 - Funding Information:
ActionAid Arthritis Researc h UK Autism Initiativ es UK The Charities Aid Foundation Cancer Research UK Catholic Agency for Oversea s Development Cats Protection Church of England Children’s Society City and Guilds of London Institute BBC Children in Need CITB Care Interna tional UK Consumers’ Associat ion Crime Reduction Initiatives Dogs Trust The Keepers and Governo rs of the Free Grammar School of John Lyon Help for Heroes Historic Royal Palaces The Royal National Institute for Deaf People International Planned Parent hood Federat ion SS. John and Elizabeth Charity The Kennedy Trust for Rheumatolo gy Research The Legal Education Foundation Liverpool Hope University Learning and Skills Improvemen t Service The Mines Advisory Group Macmillan Cancer Support The National Autistic Society National Centre for Social Research Nuffield Health
Publisher Copyright:
© 2018, Emerald Publishing Limited.
PY - 2018/6/1
Y1 - 2018/6/1
N2 - Purpose: This paper aims to investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) by using a sample of UK charities. Specifically, the authors investigate the effect of TBD on CS and ascertain whether CG quality moderates the TBD–CS nexus. Additionally, the authors examine the impact of CS on FP and ascertain whether the CS–FP nexus is moderated by TBD and CG quality. Design/methodology/approach: The authors use a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares, to rigorously analyse the data and test the hypotheses. Findings: First, the authors find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. The authors find similar, but relatively weak, results for the presence of black, Asian and minority ethnic (BAME) trustees. Second, the authors find that the TBD–CS nexus depends on the quality of CG, with the relationship being stronger in charities with higher frequency of meetings, independent CG committee and larger trustee and audit firm size. Third, the authors find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. The evidence is robust to different econometric models that adjust for alternative measures and endogeneities. The authors interpret the findings within explanations of a theoretical perspective that captures insights from different CG and CS theories. Originality/value: Existing studies that explore TBD, CG, CS and FP in charities are rare. This study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, the authors provide new evidence on the relationship between TBD and CS. Second, the authors offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, the authors provide new evidence on the effect of CS on FP. Finally, the authors offer new evidence on the moderating effect of TBD and CG on the CS–FP nexus.
AB - Purpose: This paper aims to investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) by using a sample of UK charities. Specifically, the authors investigate the effect of TBD on CS and ascertain whether CG quality moderates the TBD–CS nexus. Additionally, the authors examine the impact of CS on FP and ascertain whether the CS–FP nexus is moderated by TBD and CG quality. Design/methodology/approach: The authors use a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares, to rigorously analyse the data and test the hypotheses. Findings: First, the authors find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. The authors find similar, but relatively weak, results for the presence of black, Asian and minority ethnic (BAME) trustees. Second, the authors find that the TBD–CS nexus depends on the quality of CG, with the relationship being stronger in charities with higher frequency of meetings, independent CG committee and larger trustee and audit firm size. Third, the authors find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. The evidence is robust to different econometric models that adjust for alternative measures and endogeneities. The authors interpret the findings within explanations of a theoretical perspective that captures insights from different CG and CS theories. Originality/value: Existing studies that explore TBD, CG, CS and FP in charities are rare. This study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, the authors provide new evidence on the relationship between TBD and CS. Second, the authors offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, the authors provide new evidence on the effect of CS on FP. Finally, the authors offer new evidence on the moderating effect of TBD and CG on the CS–FP nexus.
KW - Capital structure and performance
KW - Charities
KW - Governance mechanisms
KW - Trustee board diversity
KW - UK
KW - Women and ethnic minority trustees
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U2 - 10.1108/CG-08-2017-0185
DO - 10.1108/CG-08-2017-0185
M3 - Article
AN - SCOPUS:85043480702
SN - 1472-0701
VL - 18
SP - 478
EP - 508
JO - Corporate Governance
JF - Corporate Governance
IS - 3
ER -