Board structure, political connection and firm performance: Evidence from Thailand

Abstract

Corporate governance is the system by which companies are directed and controlled, then it is expected that corporate performance is affected by corporate governance attributes. Board of directors play an important role in maintaining effective corporate governance, therefore, board structure may affect the firm performance. Politically connected listed firms may advantage as a result of certain regulatory conditions and competence to access the resources such as bank loans, debt financing and strong marketing competition which lead to increases the firm performance especially for emerging countries. This paper investigates the effect of board structure and political connection on firm performance, measured by ROA of non-financial listed companies on the Stock Exchange of Thailand (SET) during the period 2006-2017. The sample consists of 102 firms. The fixed-effects panel regression analysis is used in this study to examine the relationship between board structure, political connection and firm performance. The results found that board structure attributes have positively related to firm performance whereas political connection associated negatively and statistically with firm performance.