The Influence of Corporate Board Characteristics on Firm Performance of Publicly Listed Property Companies in the Philippines

INTRODUCTION The past and present events concerning the international business community have resulted to the term "corporate governance" finding its prominence in every business activity. In the light of massive debacles that affected firms whose primordial goals rests on profit maximization and the fulfillment of personal interests, there is a need for governance reforms where the protection of interests by all stakeholders is of great importance. Corollary to this, there is a noticeable surge in the quantity and quality of relevant research literature pertaining to corporate governance, one area of which focuses on improving the dynamics of corporate boards and their oversight role. The Philippines is of no exception to respond to this call for better governance. Inspired by the issuance of the first version of the Philippine Code of Corporate Governance in 2002 and its eventual revision in 2009 (RCCG), this study attempts to provide evidence that effective corporate boards influence firm performance on the notion that corporate boards exercising greater accountability, honesty, integrity, and ethical responsibility would ensure the company's sustained creation of shareholder value and the continued business partnership between the company and its stakeholders. This study represents the second phase of a series of discourses whose aim is to provide empirical evidence of on the influence of corporate governance to firm performance among Philippine companies. However, in contrast with my first study where the locus of the research is on the holdings sector, this paper concentrated on listed Philippine companies in the property sector. The measures of performance used were believed to have direct association towards the goal of creating shareholder wealth which influences the business decisions of a company's investors. With the issuance of the Report on the Observance of Standards and Codes by the World Bank (2006) indicating the need for greater and more restrictive oversight role of corporate boards in Philippine companies, this study rests on the fundamental nature of corporate governance which is to ensure transparency in disclosing of information that affects the decision-making of stakeholders. Consistent with the argument by Samontaray (2008), this study believes that companies promoting transparency are the ones favored by potential investors which would stimulate economic activity and firm growth as well. To shed additional light on the influence of corporate boards on firm performance, measured in terms of return on equity and share prices, among publicly-listed property companies in the Philippines, this paper attempts to seek responses to the following research questions: * Does board size influence firm performance of publicly-listed property companies in the Philippines? * Does independence affect firm performance of listed property companies in the country? * Does the separation or duality of the Chairman of the Board and Chief Executive Officer roles affect the performance of publicly-listed Philippine property companies? * Does the busyness of directors in other corporate boards affect firm performance of publicly-listed property companies in the Philippines? * Does ownership affect firm performance of publicly-listed Philippine property companies? LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT Through an efficient corporate governance mechanism, an entity need not resort to remedies that would counter attack the problems that it may face in the course of its operations. According to Stewart (2003), it is a closed-loop system of ensuring that decisions are carefully made, accountability is in full force and effect, and that incentives are to be provided as a result of better performance. This would increase the motivation of every member of the organization, from the Board of Directors down to the lowest ranking person in the entity, to give their very best towards attaining success and creating value. …