The Influence of Personal Characteristics of Directors on the Companies' Strategic Performance in Eastern Europe and Russia

<p>The present study examines the impact of directors&#39; personal characteristics on companies&rsquo; strategic efficiency in Russia and Eastern Europe. Personal characteristics in this study are gender and age of the board members.</p><p>Theoretical basis of the study are agent theory, resource dependence theory, human capital theory and the theory of social psychology.</p><p>In addition to the personal characteristics of directors, within the framework of the study the impact of corporate governance on strategic efficiency was tested. Board size, the proportion of independent board members, the number of committees and the presence of a vice-chairman in the board were selected as indicators of corporate governance quality. Q-Tobin&rsquo;s, economic value added (EVA), return on assets (ROA) and the ratio of ROIC/WACC were used as indicators of the strategic efficiency. The size of a company and its debt burden are the control variables.</p><p>Data for the study were obtained from companies&rsquo; annual reports, as well as from the Bloomberg information system.</p><p>Companies for the study were selected in the following way: the composition of the main countries&rsquo; indices were taken as of the end of 2013 and the same companies were taken in 2010, 2011 and 2012, regardless of whether they were included in the index at that time. Companies of financial sector were excluded from the sample.</p><p>In this paper I tested three hypotheses of linear dependencies between personal characteristics of directors and strategic efficiency and six hypotheses regarding influence of corporate governance and control variables on strategic efficiency. The study produced the following results: the proportion of women on the board of directors has a positive effect on the strategic effectiveness of the company, the average age of board members has a negative impact on the company&rsquo;s efficiency and age heterogeneity has a mixed impact. In addition to the main hypotheses I tested influence of control variables on the efficiency. As a result, the following conclusions were obtained: the proportion of independent directors has a positive effect on the strategic efficiency, board size and debt burden impacts negatively on efficiency, and the size of the company has a mixed impact on efficiency.</p>