Macro- and Micro-level Determinants of Board Effectiveness in European Listed Companies: A Comparative Analysis of the United Kingdom and Romania

Abstract

In this empirical study, UK and Romanian listed firms are analyzed and compared in order to determine the correlations between board processes, board role performance, and board effectiveness. Explanatory and quantitative in nature and based on the survey method, the research design uses validated statements based on a 7-point Likert-type scale, grouped into validated constructs. It was sent to 342 chairmen of selected Romanian and British listed companies. The study provides additional support for the moderating impact of national settings (legal, institutional, and cultural) on board effectiveness, the mediating effect of board roles on board processes, and the relevance of those board processes as predictors of board effectiveness. This study adds to the sparse body of research that examines the influence of board processes on board performance as well as the moderating role played by the national context in these processes and, ultimately, board effectiveness. The primary drawback of this study is the small sample size (55), which suggests that the results are less reliable and less generalizable. To ensure the homogeneity of the sample, however, a number of measures were taken, beginning with a distinctive dataset of enterprises with equivalent sizes and industry representation. The study is helpful for regulators who wish to better regulate board conduct as well as board directors and chairmen of publicly traded firms since it can assist them in better understanding and controlling board behavior.