Board attributes and firm performance: Tunisian evidence

This study examines the relationship between board attributes and firm performance. In accordance with agency theory, effective board of directors plays a key role in establishing good corporate governance and enhancing firm performance by mitigating earnings management. Based on panel data set drawn from Tunisian listed firms over the period 2011 – 2017 and while using dynamic panel GMM estimator to alleviate endogeneity problems, a U-shaped relationship was found between board size, board independence and firm performance. Indeed, results show that a higher firm performance is confirmed if the board size is composed of at least 6 members and 15% of independent board members. For a robustness check, this study measures a composite score of the effectiveness of board of directors to capture the aggregate impact of board’s effectiveness on firm performance. The findings of regression analysis find a significant positive relationship between the board effectiveness score and firm performance. Indeed, there is a synergy between mechanisms that act together to enhance firm performance in the Tunisian context.