The impact of board characteristics on financial performance in an emerging economy: the moderating role of nomination and remuneration committee

Purpose - This study investigates the moderating role of nomination and remuneration committees on the relationships between board characteristics and the financial performance of listed textile businesses in Bangladesh. Design/methodology/approach - The study utilises the theoretical frameworks of agency, resource dependence and stakeholder theories. The study investigates the moderating effect of nomination committees using regression analysis by evaluating a sample of 270 firm-year observations from 2016 to 2021. Findings - The results reveal that nomination committee presence enhances the performance benefits of larger board size and frequent meetings but negatively reinforces the detrimental effects of excessive independent directors lacking firm-specific expertise. Female board representation demonstrates an unexpected negative association, implying suboptimal selection. Research limitations/implications - Overall, nuanced moderating effects of nomination committees on board characteristic-performance relationships are evidenced. This timely study contributes empirical evidence on an underexplored area and provides a foundation to advance academic literature on the linkages between nomination committees, corporate boards and firm-level outcomes. Further research avenues are highlighted. Practical implications - The findings have salient implications for enhancing board competency and engagement, reforming nomination committee policies towards competency-based nominations and discouraging token appointments to fulfil regulatory mandates on board diversity. Originality/value - This is the first study to provide insights into the moderating effects of nomination committees on board characteristic-performance relationships in Bangladesh's textile industry.