| Summary: | The role of the board of directors and their composition is a matter that revolves around
different contradictory views for the determination of the performance of the firms. There
are several contrasting views that have emerged related to the size of the board and its
effect on performance. One set of researchers’ state that larger board size will have
diverse skill and knowledge which in turn will have a positive impact on the performance
of the firm. The other group of researchers state that a larger board size will have a
negative effect on performance due to reasons like lack of coordination, slow decision
making process and free rider issues. The third group states that the relationship
between the size of the board and the performance of the firm is in form of an inverted
U shaped curve. While some other researchers find low significance or no link between
the board size and the performance of the firm. The researcher has thus formed the first
and the third hypothesis based on these contradictory views.
Based on the contradictory opinions regarding the number of non-executive directors
and their effect on performance of the firm the researcher has set the second
hypothesis for this dissertation. There are three groups of researchers that study the
effect of non-executive directors and their impact on the performance of the firm. One of
them state that there is a positive impact on performance, the other state that there is a
negative influence due to the outside directors and the third find no relation between the
non-executive directors and the performance of the firms. This dissertation studies
these issues, uses quantitative method to study the effect between variables, explains
the vagueness in data obtained, discusses the findings and mentions the inferences
and the implications formed out of this dissertation.
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