Effect of Board Composition on the Corporate performance: The Moderating Role of Corporate Governance Practices in Iraq

Abstract

Governance is increasingly recognized by the business community, regulators and capital market authorities as a fundamental driver of corporate performance. Hence, the overarching objective of the current study is the development of a moderation model to investigate the effectiveness of these Board Structure characteristics in the presence of Corporate Governance Practices in Iraqi context. This paper follows a quantitative deductive approach to collect the data of 166 respondents from 207 Iraqi companies, 107 of which are listed on the Iraqi Stock Exchange and 100 companies with large capital and are not listed on the Iraqi stock exchange. Statistical Package for the Social Sciences (SPSS) and Structural Equation Modeling (SEM) through Smart PLS 3.3 have been used to analyze the hypotheses. The study provides robust evidence that board composition variables such as board educational level, board political connection and board ethnic diversity significantly affect the CP in the Iraqi context. However, the result propounds non-significant influences of Board gender diversity. Moreover, there is evidence that the presence of corporate governance practices tends to negatively moderate the influence of board political connection and board gender diversity on corporate performance. On other hand, corporate governance practices positively moderate the relationship between board ethnic diversity and firm performance. While does not affect board educational level.

These results give rise to certain regulatory and managerial implications, all of which, calls for more concerted efforts in strategically implementing prudent governance solutions in order to the future proof  Iraqi market.