Board influence on a firm's long-term success: Australian evidence

Despite the association between the board of directors and firm performance having been examined extensively in the literature, empirical evidence on whether and how boards contribute to firms' long-term success is scarce. Using 14-year panel data of all Australian listed firms, this study examines the effects of board potential and board dynamics, the key factors of board effectiveness, on firms' investment efficiency. We find strong evidence that both board potential and board dynamics are positively associated with firm investment efficiency. The findings support the view that both firms' resources and internal processes that enable boards to mobilize those resources to resolve complex tasks are critical for a firm's long-term success. (C) 2020 Elsevier B.V. All rights reserved.