Impact of corporate governance on financial and non-financial performance of hospitals: Evidence from National Health Service in England

Abstract

The objective of the research is to investigate the impact of corporate governance on financial and non-financial performance of 128 National Health Service (NHS) hospitals. The sub-objective of the research is to determine the impact of corporate governance on financial and non-financial performance by hospital type, namely, trust and foundation trust hospitals. The data was hand collected from the annual reports of the NHS hospitals and other sources, such as quality reports, for the period 2014 to 2018. Return on Assets (ROA) was used to measure financial performance and the 62-day cancer referral and treatment target was used to measure non-financial performance. The data was analysed using two techniques of fixed effects ordinary least squares multiple regression and fixed effects logistic regression.

The main findings indicate that board expertise, especially nurses, board meetings, board diversity, CEO gender and academic directors have a significant negative impact on financial performance of English NHS hospitals. On the other hand, multiple directorships have a significant positive impact on non-financial performance of the English NHS hospitals, while board expertise, particularly nurses and board diversity exert a significant negative impact on non-financial
performance of English NHS hospitals.
At hospital type level, further empirical results reveal that board expertise, especially nurses on the board, board diversity and CEO gender have a significant negative effect on financial performance of NHS trusts. Similarly, CEO gender exhibits a significant negative impact on financial performance of NHS foundation trusts. For non-financial performance, multiple directorships and honoured directors have a significant positive impact on non-financial performance of NHS foundation trusts while board expertise, particularly nurses, and board diversity reveal a significant and negative impact on non-financial performance of NHS foundation trusts. Notably, all the corporate governance indicators have an insignificant impact on non-financial performance of NHS trusts.

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ORCID for Venancio Tauringana: orcid.org/0000-0002-1433-324X

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