Corporate boards and company performance: review of research in light of recent reforms

Recent US corporate governance reforms introduced extensive regulations and guidelines for public corporations, particularly corporate boards. This article evaluates the extent to which empirical research on corporate boards and firm performance supports these reforms. Building on the meta-analysis conducted by Zahra and Pearce (1989), we review 105 studies published between 1989 and 2005. We find most of the practices mandated by the Sarbanes-Oxley Act of 2002, and the regulations issued by the New York Stock Exchange (NYSE) and the NASDAQ, had not been subject to prior study. Where board characteristics have been studied, we find limited guidance for policymakers on identifying governance practices that result in more effective firm performance. In an effort to increase the relevance of future research on boards and firm performance, we provide a framework on corporate boards.