The effect of board multiple directorships and CEO characteristics on firm performance: evidence from Palestine

Abstract

Purpose – The purpose of this study is to empirically examine the effect of board multiple directorships andchief executive officer (CEO) characteristics on firm performance among nonfinancial firms listed on thePalestine Security Exchange (PSE) during the period from 2009 to 2016.Design/methodology/approach – Based on 200 observations, this study utilizes panel data to examine theeffect of the predictors on firm performance measured by return on assets. The analysis is repeated using thereturn on equity and two regression methods to evaluate the robustness of the main analysis (pooledregression, and backward stepwise regression analysis).Findings – The results show that the “busyness” of a CEO reduces their effectiveness and is associated withlosses in the companies where they are in charge. On the other hand, the results show that CEO tenure, CEOexperience and CEO political connections have a positive effect on corporate performance.Originality/value – This study is timely given that the practice of multiple directorships is widely commonamong firms in developing countries. Prior research in Palestine has not investigated the role of multipledirectorships and the CEO characteristics on corporate outcomes. This study provides a picture of the potentialbenefits to firms, policymakers and professional bodies from considering CEO variables. The findings of suchan examination can help them to set up suitable policies and enhance the role and the quality of the CEOin firms.