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Critical Appraisal of a Quantitative Study

Evidence-based practice is applied in numerous sciences whereas the use of quantitative methods allows for conducting statistical analysis the result of which can be further replicated and either confirmed or refuted by the scientific community. To generate verifiable knowledge, the same methods of research should be applied.

The sphere of corporate governance lies at the intersection of management and finance since the structure of top executives and characteristics and the balance of power between particular directors affect both managerial and financial issues, and ultimately, all other aspects of the organisational performance. Results received by previous researchers can be applied in practice.  Thus, it is important that these results are objective and unbiased.

For the aims of the paper, the article “Corporate governance and board of directors: The effect of a board composition on firm sustainability performance” by Naciti (2019) was chosen. For critically appraising this article the framework suggested by Coughlan et al. (2007) was employed. This framework considers two types of elements, namely those influencing believability of research and those affecting robustness of research.

The article is written in a very good English which means that it is concise as it includes only 8 journal pages, in general grammatically correct as it contains neither obvious mistakes nor jargon, and the text is fluent and quite easy for understanding. However, some minor mistakes and the use of figures of speech not typical for native speakers can be noticed in the text.

The author’s qualification looks to be appropriate for writing such an article since Valeria Naciti represents the University of Messina Department of Economics, Italy. Her qualification can also be confirmed by the fact the she has numerous academic publications on the issues of corporate governance and sustainable development of organisations which is evidenced by her profile at Researchgate. However, it is not clear whether the researcher has the practical experience of working in the corporate governance sphere or her knowledge is purely academic.

The title of the article clearly identifies the subject of research and the particular issue explored in the study. First, the sphere of interest is identified, namely corporate governance and board of directors. After that, the issue is indicated which makes it clear that the article examines how board structure and which of its characteristics influence sustainability of firm performance. Sometimes article titles report the sample of investigation (Khamis et al., 2015; Yameen et al., 2019), but this article specifies the explored sample in the abstract.

The abstract of the article provides a clear and comprehensive overview of the study. In particular, the research problem is formulated which is the effect of corporate governance characteristics on sustainability performance. Also, the sample and the chosen analytical method are also indicated in the abstract. Finally, the main results of the analysis are provided. However, the abstract lacks recommendations that could be suggested based on the research outcomes.

The problem examined in the study is clearly identified in the introduction. The author has chosen the approach of narrowing the research problem from a wider field. Specifically, first, the overall relationship between corporate governance characteristics and firm performance is suggested and substantiated using the references to relevant literature. Next, the issue of firm performance is constricted to sustainable performance which is a narrower concept than the overall performance. After that, the researcher shows that the association between board composition and sustainable performance has not been examined in detail in the existing literature and there is no common viewpoint how board of directors features influence sustainable performance of the firm. Therefore, the logic of establishing the goal to investigate this relationship can be easily understood.

The paper is logically consistent and has the following structure. First, the analysed problem is formulated based on the existing literature on the topic. Second, the review of both theoretical and empirical literature is conducted to find out what results were attained by other researchers. Third, the methodology of the analysis is determined based on these findings. Fourth, the outcomes of the analysis are presented. Fifth, the attained results are interpreted and discussed in the light of the previous findings. Sixth, some limitations of the article which can be addressed in the future research are indicated. This structure is logical and in general corresponds with recommendations on writing the research papers (Hoogenboom and Manske, 2012; Martin, 2014).

The research question is clearly formulated namely whether board characteristics affect sustainable performance of the firm. The three objectives arose to answer this question in line with the three explored board characteristics. Accordingly, the three hypotheses are formulated to testing the study. These hypotheses suppose that each of the characteristics including board independence, board diversity and separation of CEO and the Board chairman positively contribute to firm sustainable performance.

The literature review is structured quite logically. The author combined the review with hypothesis development.  First, the author showed that corporate governance procedures should comply with the aims of firm sustainable development. Next, the two main theories stipulating polar behaviour of the firm are outlined. In particular, the agency theory predicts that managers can pursue their own interests and thus behave not in interests of shareholders and long-term firm goals (Sami et al., 2011). Meanwhile, stakeholder theory notes that there are much more stakeholder groups around the firm such as employees, customers, local community and authorities whose interests should be accounted for as well (Onakoya et al., 2014). After that, the evidence on three explored characteristics of the board of directors and the corresponding hypotheses are formulated. These three board features are board independence, board diversity and CEO independence.

The theories comprising the theoretical framework are relevant for the study purposes. The matter is that the agency theory which focuses on the potential conflict between managers and owners mostly analyses financial performance of the firm and therefore might ignore other aspects of performance such as environmental and social impacts of the firm. Meanwhile, stakeholder theory posits equal importance of non-financial aspects along with financial ones. Thus, the choice of the model of firm behaviour affects the degree of attention to non-financial aspects of firm performance. What is less logical is that these theories are not explained comprehensively but their explanation is divided into groups in accordance with research hypotheses and explored variables. This makes the interpretation of theories less clear. Along with that, an advantage of the literature review is that empirical evidence showing different viewpoints on the impact of the aforementioned board characteristics is provided. The empirical literature used in the review is the mix of recent and old papers, most of them using secondary data in contexts of different countries.

The sample has not been appropriately explained by the author. The sample comprised 362 companies from the Fortune top 500 firms, which is 72.4% of the sample, but the criteria of selection were not mentioned. One may suggest that the choice depended on the availability of the data for the analysis, but it was not articulated by the researcher. Obviously, non-probability sampling was applied while the sample size is still sufficient to conduct the analysis and make generalisable conclusions. As for the data for the analysis, secondary data from reliable databases, namely Sustainalytics and Compustat Global Vantage, were used.

In terms of ethical considerations, the research brought no harm to any sides as it employed only secondary data that are freely available in companies’ annual reports or in databases for a charge. This means that no trade secrets or confidential information were revealed in the study. Moreover, the use of positivist approach implies that these data can be used by any other researchers to check and replicate the attained results.

The terms and theories in the study are clearly defined in the study. A drawback of the study is that the research design has not been formulated in the study. On the other hand, the research method is clear as the sequence of procedures is explained. As mentioned above, the data has been collected from reliable databases, but the criteria of data filtration have not been indicated. The data and the data collection technique are appropriate since it would be very time- and resource consuming to gather the data manually from open sources.

A drawback of the study is that while the dependent variable and explanatory variables have been explained, the empirical model was not formulated. This inhibits understanding the research method. Along with that, another specific trait of the data sample is that it remains unclear whether independent variables are used in the form of dummy variables where 0 would represent one state of a characteristic while 100 would an opposite state, or the variables can take intermediate values within the range 0-100. Moreover, unlike other studies dedicated to exploring corporate governance mechanisms (Afrifa and Tauringana, 2015; Buallay et al., 2017), the values of independent variables are taken in an unusual manner. In particular, the value 100 is assigned to these variables if the board consists of two thirds of independent directors, female directors, and directors with nationality distinct from the company’s country, respectively.

Moreover, further presentation of results shows that the effect of board characteristics and control variables was estimated separately on sustainable performance, social performance and environmental performance whereas the description of the dependent variable outlined was shown as a weighted average of these three dimensions. This ambiguity is another shortcoming of the study methodology.

The choice of the analysis method was explained in detail. Specifically, the author showed that some of the explanatory variables were determined along with the dependent variable which could entail the problem of endogeneity of the independent variables and appearance of unaccounted fixed effects. The use of a pooled OLS regression would produce biased estimators and thus distort the estimation results. Thus, neither a pooled OLS regression or fixed effects panel regression would be an appropriate method. To address the endogeneity of board characteristics and potential heteroskedasticity, autocorrelation and heterogeneity in the sample, the author applied the system-generalized method of moments (SGMM) which was shown to be more suitable in this case. Moreover, Hermalin and Weisbach (2003) previously indicated that board features were endogenously associated with performance. Therefore, to account for this endogeneity, the researcher employed t-2 and t-3 lags for all explanatory variables as instrumental variables.

In addition, the diagnostic tests were conducted in the study to check the validity of results. The first test is the Hansen-Sargan test that examined the relevance of the imposed restrictions.  This test states that the employed instruments are appropriate in case the moment conditions hold. The second test is the autoregression test with the lag t-2 that was used to ensure non-serial correlation of the error terms. The tests showed the validity of the restrictions and non-serial correlation of the error terms, respectively.

The analysis provided the following results. Board diversity and CEO duality significantly and positively affected all the three explored aspects of firm performance. That is, greater diversity of board members in terms of nationality and gender as well as separation of the CEO and Board chairman roles contributed to performance positively. Meanwhile, the effect of board independence on sustainable performance and social performance was negative. As for control variable, higher profitability and larger size influenced firm performance positively.

The attained results appeared to be in line with both considered theories. Namely, a positive effect of CEO and chairman roles separation was in line with agency theory as it mitigated potential conflict of interests and provided better control over executives. Along with that a positive impact of board diversity on performance accorded with stakeholder theory as diversity would contribute to accounting for interests of different stakeholder groups.

Other benefits of the study were the following. The author provided recommendation for further research which could improve and specify the attained results. Along with that, the limitations were also indicated which allowed for addressing them in the future studies. The references made in the APA referencing style are full as all cited sources were included in the reference list.




Afrifa, G. A. and Tauringana, V. (2015) Corporate governance and performance of UK listed small and medium enterprises, Corporate Governance: The international journal of business in society, 15(5), pp. 719-733.

Buallay, A., Hamdan, A. and Zureigat, Q. (2017) Corporate Governance and Firm Performance: Evidence from Saudi Arabia, Australasian Accounting, Business and Finance Journal, 11(1), pp. 78-98.

Hermalin, B. E. and Weisbach, M. S. (2003) The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey, Journal of Economic Literature, 48 (1), pp. 58-107.

Hoogenboom, B. J. and Manske, R. C. (2012) How to write a scientific article, International Journal of Sports Physical Therapy, 7(5), pp. 512–517.

Khamis, R., Hamdan, A. M. and Elali, W. (2015) The Relationship between Ownership Structure Dimensions and Corporate Performance: Evidence from Bahrain, Australasian Accounting, Business and Finance Journal, 9(4), pp. 38-56.

Martin, E. (2014) How to write a good article, Current Sociology, 62(7), pp. 949–955.

Naciti, V. (2019). Corporate governance and board of directors: the effect of a board composition on firm sustainability performance, Journal of Cleaner Production, 237 (10), pp.1-8.

Onakoya, A. B. O., Fasanya, I. O. and Ofoegbu, D. I. (2014) Corporate Governance as Correlate for Firm Performance: A Pooled OLS Investigation of Selected Nigerian Banks, IUP Journal of Corporate Governance, 13(1), pp. 7-15.

Sami, H., Wang, J. and Zhou, H. (2011) Corporate governance and operating performance of Chinese listed firms, Journal of International Accounting, Auditing and Taxation, 20(2), pp. 106-114.

Yameen, M., Farhan, N. H., Tabash, M. I. (2019) The impact of corporate governance practices on firm’s performance: An empirical evidence from Indian tourism sector, Journal of International Studies, 12(1), pp. 208-228.