The University of Southampton
University of Southampton Institutional Repository

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
Purpose: we investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, we investigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus. Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderated by TBD and CG quality.

Design/methodology/approach: we employ a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the data and test the hypotheses.

Findings: first, we find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. We find similar, but relatively weak results for the presence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends on the quality of CG with the relationship being stronger in charities with higher frequency of meetings, independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to different econometric models that adjust for alternative measures and endogeneities. We interpret our findings within the explanations of a theoretical perspective that captures insights from different CG and CS theories.

Originality/value: existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS. Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide new evidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CG on the CS-FP nexus.

Keywords: trustee board diversity, women and ethnic minority trustees, governance mechanisms, capital structure and performance, charities, UK
Trustee board diversity, governance mechanisms, capital structure, performance, Charities, UK
1472-0701
478-508
Elmagrhi, Mohamed H.
4961f329-8a2d-47c5-83ee-34fc058030fe
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Tunyi, Abongeh A.
5b8bebf9-5060-4f17-8cee-14ce3a93b458
Elmagrhi, Mohamed H.
4961f329-8a2d-47c5-83ee-34fc058030fe
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Tunyi, Abongeh A.
5b8bebf9-5060-4f17-8cee-14ce3a93b458

Elmagrhi, Mohamed H., Ntim, Collins, Malagila, John, Fosu, Samuel and Tunyi, Abongeh A. (2018) Trustee board diversity, governance mechanisms, capital structure and performance in UK charities. Corporate Governance, 18 (3), 478-508. (doi:10.1108/CG-08-2017-0185).

Record type: Article

Abstract

Purpose: we investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, we investigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus. Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderated by TBD and CG quality.

Design/methodology/approach: we employ a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the data and test the hypotheses.

Findings: first, we find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. We find similar, but relatively weak results for the presence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends on the quality of CG with the relationship being stronger in charities with higher frequency of meetings, independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to different econometric models that adjust for alternative measures and endogeneities. We interpret our findings within the explanations of a theoretical perspective that captures insights from different CG and CS theories.

Originality/value: existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS. Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide new evidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CG on the CS-FP nexus.

Keywords: trustee board diversity, women and ethnic minority trustees, governance mechanisms, capital structure and performance, charities, UK

Text CG Accepted Manuscript_Jan_2018.pdf1 - Accepted Manuscript
Restricted to Repository staff only until 3 January 2019.
Request a copy

More information

Accepted/In Press date: 3 January 2018
e-pub ahead of print date: 7 February 2018
Keywords: Trustee board diversity, governance mechanisms, capital structure, performance, Charities, UK

Identifiers

Local EPrints ID: 416742
URI: https://eprints.soton.ac.uk/id/eprint/416742
ISSN: 1472-0701
PURE UUID: 6e86be4e-7a31-4279-9c6f-460d3ceb5a75
ORCID for John Malagila: ORCID iD orcid.org/0000-0001-5327-2286

Catalogue record

Date deposited: 08 Jan 2018 17:30
Last modified: 08 Jun 2018 00:31

Export record

Altmetrics

Contributors

Author: Mohamed H. Elmagrhi
Author: Collins Ntim
Author: John Malagila ORCID iD
Author: Samuel Fosu
Author: Abongeh A. Tunyi

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×