Research in International Business and Finance 44 (2018) 218–226

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Research in International Business and Finance

journal homepage: www.elsevier.com/locate/ribaf

Full length Article

Chief Executive Officer attributes, board structures, gender

T
diversity and firm performance among French CAC 40 listed firms
⁎
Ali Ahmadi , Nejia Nakaa, Abdelfettah Bouri
Faculty of Economics and Management of Sfax, Airport Road Km 4, 3018 Sfax, BP 1088 Tunisia

AR TI CLE I NF O AB S T R A CT

Keywords: Reflecting investor expectations, most prior corporate governance research attempt to find the
Duality of Chief Executive Officer (CEO) effect duality Role of Chief Executive Officer, board structures and firm financial performance.
CEO tenure Specifically, we refer to devote this paper on investigating the relationship between the Duality
Board structure Role of Chief Executive Officer (CEO), the CEO tenure, board structures and gender diversity with
Gender diversity
tow measurement of performance in listed companies in CAC 40. We found evidence provide that
Firm performance
board characteristics are positively correlated to the firm’ performance. However, our results
show a significant association between ROE, ROA and the board of directors’ composition. We
find significant negative association between financial information and equity-based manage-
ment compensation. On the other hand, the presence of independent directors on the board
seems to affect, positively, the level of financial performance CAC 40 firms. Likewise, the
stewardship theory assumption, the CEO duality is very high and is significantly associated with a
higher level of firm performance. Our results suggest a constant negative relation between firm
performance and CEO’s tenure. The results show that there is a significant relationship between
board gender diversity and firm performance from our samples CAC 40 companies.

1. Introduction

The board of directors, as an important mechanism of governance, has been the subject of an attention of several researchers of
different disciplines (law, economics, finance…). As well, the operation of this body of control is at the centre of interests of many
debates and proposals for reform of its composition and its characteristics including the size, the presence of the independent
members, the participation of women, the duality of functions … And therefore it has an abundant literature who is interested in
studying the impact of the Board of Directors on the performance. The board of directors is one form of internal control mechanisms
in corporate since the board members appoint, supervise and remunerate top managers in organizations in addition to strategy
formulation (Campbell and Minguez Vera, 2010). The subject of women on boards of directors is a growing area of research. Indeed,
the presence of women on board was identified by Brennan and McCafferty (1997), more recent study continue in the same path
(Luckerath-Rovers and Woods, 2011; Shehata 2013) identified the reasons that presence of women on board directors leads to
increasing firms’ values. Firstly, with independent women in the board, and as they are not part of the “old boys” network, thus can
increase the firm’s value.
Secondly, women member at the board of directors might provide more insights about the firms’ opportunities in meeting their
customers’ needs, since they can better understand customers’ some needs and behaviours. In a similarly study, Bernardi et al. (2002)
support the idea that board of director with presence of women will enhance board’s monitoring (Carter et al., 2003), thus

⁎
Corresponding author.
E-mail address: ahmadi2402@gmail.com (A. Ahmadi).

http://dx.doi.org/10.1016/j.ribaf.2017.07.083
Received 22 December 2016; Accepted 3 July 2017
Available online 08 July 2017
0275-5319/ © 2017 Elsevier B.V. All rights reserved.
A. Ahmadi et al. Research in International Business and Finance 44 (2018) 218–226

improvement of corporate governance which can lead to ameliorate firms’ competitive advantage. The authors summarized the
advantages of presence of women on board of directors as follows: that can improve the diversity of opinions in the boardroom,
provide the female role models and mentors bringing strategic input to the board of directors, influence the making decision and
leadership styles of the corporate, female’s capabilities and availability for director positions and ensuring “better” boardroom
behaviour.
Nielsen and Huse (2010) was identified another aspect, that the presence of women on board contribute to reducing the level of
interest conflict and ensure high a quality of development activities board of directors. In a recent study, and to conclude the
advantages of gender diversity, Francoeur et al. (2008) was provides that the smoother communication and coordination associated
with less diverse sets it comes to improve the advantages related to the knowledge, quality of decision making, perspective, creativity,
and judgment brought forward by heterogeneous groups. Similarly, other study was found that the presence of female gender on
board of directors is positively associated to companies’ level of profitability Burke (1997).
Carter et al. (2003) and Erhardt et al. (2003) find a positive association between the percentage of women on board and firm
value. Adams and Ferreira (2009) also support the view that increasing the percentage of women on board will enhance the board’s
successfulness as they will raise issues at board meetings that would not have been raised in homogenous boards. The positive
correlation is more pronounced in, first, sectors where women form a larger share of the labour force (such as the services sector) and,
second, where complementarities in skills and critical thinking are in high demand (such as high-tech and knowledge-intensive
sectors).
Francoeur et al. (2008) reported a positive relationship between the proportion of women in senior management levels and
abnormal returns in complex environments but no significant relationship concerning women on board. Nielsen and Huse (2010) also
find a positive relationship between women on board and the board’s strategic control. Carter et al. (2010) find no significant
association between gender type and firm performance. Finally, Gul et al. (2011) argue the existence of a positive association
between gender diversity and the level of stock price informativeness.
About the association between the presence of female gender on board of directors and corporate disclosure can be explained by
the agency theory and the stakeholder theory. For the agency theory, it has been criticised with respect to the relationship between
board diversity and firm value by Francoeur et al. (2008). In deed the authors provide that from an agency-theoretic standpoint,
when one considers the overall impact of gender diversity on the various duties being assumed by a board of directors, it is thus
impossible to tell, whether promoting greater female participation will enhance or impair corporate governance and, as a direct
consequence, firm financial performance.
Also, they supported using the stakeholder theory rather than the agency theory and they argued also that there are many studies
have confirmed the accuracy of stakeholder theory. In a similarly study, Carter et al. (2003) was used the agency theory to explain the
association between presence of women on board and firm value. Gul et al. (2011) provide that the gender diversity in the boards of
directors improve the quality of disclosure through better monitoring. Based on the agency theory, since presence of women on board
increases board independence as discussed earlier, therefore, a positive relationship between presence of women on board and
corporate disclosure is expected. Accordingly, both of the agency theory and the stakeholder theory predict a positive association
between presence of women on board and corporate disclosure.
In the literature concerning the separation of the roles of Director General and President of the Board of Directors, the conclusions
are divergent: some are for the duality, other against. The supporters of the Duality (Godard 1998) see that the cumulation of the two
functions allows having a good leader and it should therefore lead to a superior performance. While others argue that the duality
appears as a hindrance to the performance.
The remainder of this paper is structured as follows. The A literature review and research hypotheses, followed by a description of
the data and variables measurement. We then present the regression models and results, followed by concluding remarks.

2. Literature review and research hypotheses

In the framework of this research, we are interested in several aspects of the board of directors including: The board size: the size
of the Board of Directors is the subject of various debates. It reflects the number of directors within the Council saw that the latter are
able to control the leaders. Indeed, some countries set an optimum size, while others choose a minimum and maximum size. In this
context, Hermalin and Weisbach (2003) have concluded that the size of the board of directors is negatively correlated with the
performance of companies’ saw that the increase in the size leads to problems of coordination. Indeed, the agency theory (Jensen,
1993) finds that a high size motivates the domination and the authority of the leaders which gives birth to conflicts. In contrast,
Pearce and Zahra (1992), Dalton et al. (1999) have shown a positive relationship between the size of the Board of Directors and the
performance; therefore a board composed of a high number of administrators, can effectively control the decisions taken by the chief
executive officer, of where this officer cannot take decisions against the interests of shareholders.
There are several studies investigates in whether or not the board size has an impact on the firm performance. Indeed, Coles et al.
(2008) argues that the company tends to have larger boards, and it is likely to improve the level of financial performance. In contrast,
Guest (2008) reports an inverse relationship linked the board size of directors and firm performance. Similar result provided by
Reddy et al. (2008) for New Zealand listed-firms. Furthermore, the median board size for New Zealand companies is six directors
which is less than what Jensen and Meckling (1976) suggests for companies in the U.S. However, the board of directors with small
size in New Zealand firms fits with its small market criteria. Though the result is inconclusive, it is assumed that larger boards provide
more expertise, greater management oversight and access to a wider range of resources; therefore to balance the skills required in the
board room, New Zealand companies may require larger boards.

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H1. board size and firm performance are positively correlated.

An independent director may improve the management hierarchy with the identities of 3rd party. For the potential investor who
invests, the firm’ value would elevate if outside directors are employed. With independent directors, investors will think that the
financial and nonfinancial aspects of the firm are better than other without outside board member. Ertimura et al. (2010) report that
firm with independent directors would yield better performance than other without independent directors. Indeed, the independent
directors are able to supervise and to control the operation of the internal of company through the implementation of their super-
vision authority. Also, Chau and Gray (2010) provide that the performance of company with independent directors would be better
than company without independent directors. Against the current, Linck et al. (2008) found a negative relationship between per-
formance and the presence of independent directors within the board. They assume that the independent directors are incompetent to
effectively control the leaders.
So this research establishes H2 according to the literatures described above.
H2. the level of independent director in board of directors and financial
The stewardship theory offers a complementary perception states that the stakeholders are good stewards to firms’ resources and
can contribute in the improvement of her efficiency (Donaldson and Davis, 1991). In a recent study, Gillan (2006) has provided a
positive relationship between CEO duality and firm financial performance. Similarly, Faleye (2007) found that CEO duality is po-
sitively correlated to organizational complexity, the CEO reputation and the level of managerial ownership. These findings are
similarly with those of Adams et al. (2005) and Jackling and Johl (2009) were argued that the shareholders’ benefits are enhanced by
combination of chairman and CEO function. The stewardship theory yields that the CEO duality founds in more consistent strategies’
formulation and implementation; and subsequently better firm performance. The theory voices a view of a positive managerial
attitude and motivation such as a sense of achievement, altruism or responsibility, and may offer an alternative to agency theory
explanation regarding a positive relationship between CEO duality and firm performance (Donaldson and Davis, 1991). For Rego and
Wilson (2012) have found that the duality of functions is a signal from a low system of governance as it promotes the rooting of
leaders. Indeed, Kaymak and Bektas (2008) have demonstrated that the duality is negatively related with the performance in Turkey.
Therefore, under the stewardship framework, it is hypothesized that:
H3. duality of function of CEOs and Chairman of the Board and firm performance are positively correlated.
Gender diversity studies have evolved into a challenging study issue in academia for the last years. Most of this studies haves
commenced from the fact that there are an enhancement numbers of women in top management as well as on boards of directors.
Most of the studies in the area of the effect of gender diversity of the board are focused on profitability and, so far, there is no
consensus in the literature revue on the association between female presence and corporate performance. Several researches provide
that gender diversity leads to increase corporate performance while others argues there is no such relationship (Carter et al., 2003;
Gregory-Smith et al., 2014).
Similarly, the presence of women within the board is studied by various researchers including Singh et al. (2001, 2008) for the
context of Britain; Adams and Ferreira (2007, 2009) for the context of the United States, and Rose (2007) for the Danish enterprises.
In this way, Van der Walt and Ingley (2003) show that the presence of women in the board of directors has an impact on the
composition of the board, of its characteristics and expertise provided by the presence of the feminine values which are involved in
the process of control. In the same sequence of ideas, Adams and Ferreira (2009) stipulate that women directors to participate more
actively in the meetings of the board. This promotes the control exercised by the board and the various committees. And therefore the
diversity of gender is a source of alignment of the interests of the leaders on those of shareholders and therefore the Agency costs
decrease.
Associated to the above is idea from prior literature on the existence of differences between men and women, risk taking, decision-
making, communication and firm performance (Rose, 2007). Gender diversity literature emphasizes that diversity may enhance the
board’s decision making process as new perceptions on various issues are presented and combined with a mutual exchange of ideas
between members of the board with dispersed backgrounds and experience (Alvarez and McCaffery, 2000). Watson et al., 1993, was
argues that the gender diversity leads to increase the creativity and innovation, knowledge, and therefore becoming a competitive
advantage.
The findings provided by Huse and Solberg (2006) reveal that the women on board decision making processes starts from the
point that decision-making does not only take place within the boardroom but also before, during and after meetings as well as
outside the meetings. This can be indicated that women are more prepared than men for meetings and are therefore they will be more
likely to make the best decisions. Fehr-Duda et al. (2006) argues that the women have better multi-tasking skills, methods of risk
management and communication abilities as compared to their male counterparts. These abilities make women more competent and
willing to take on different responsibilities at the same time as well making them better at communication and management of
different situations within and outside the firm. The findings provided by these two studies are similar than the argument raised by
Burke (1997) “increasing women’s board presence enriches board information, perspectives, debate and decision making”.
In addition to improving the effectiveness of corporate governance, literature indicates that gender diversity also improves firm
performance. A vast amount of literatures has examined the relationship between gender diversity and performance (Carter et al.,
2003; Rose, 2007; Erhardt et al., 2003). Whilst the literature on gender diversity continues to grow, the empirical study on board
gender diversity and corporate performance remains mixed and largely concentrated. Carter et al. (2003) have examined the as-
sociation between board composition and firm value for Fortune 1000 firms and provide that there is a significant and positive

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relationship associate the fraction of women or minorities on the board to the firm value.
The authors found that firms making a commitment to enhance the number of women on board also to have more minorities on
their boards of directors and vice versa. Similarly, the studies by Erhardt et al. (2003) argues a positive relationship associate the
gender diversity and firm performance when they investigated the relationship between board composition diversity and the level of
financial performance for large US firms and the relationship of board gender diversity to organizational performance respectively.
Inversely, Rose (2007) found there is no significant relationship between director’s gender diversity and financial performance.
Indeed, Watson (2002) in a study based on the argument that female entrepreneurs are more likely to maximize the firm size
thresholds (smaller than those of their male counterparts) beyond which they would not prefer to expand hypothesizes that female
controlled businesses will generate lower outputs compared to male controlled business.
Carter et al. (2003) provide a positive association between board diversity and firm value amongst Fortune 1000 firms measured
by Tobin's Q. Similarly, Julizaerma and Sori (2012) provide a positive relationship linked the presence of female gender on the board
of directors to the firm performance in Malaysian companies. Whereas, Rose (2007), Farell and Hersch (2005) show that there is no
effect of the diversity gender on the performance. Conversely, Wang and Clift (2009) argues that board gender diversity does not
significantly improve accounting measures of financial performance measured by the return on equity (ROE) and the return on assets
(ROA). Adams and Ferreira (2009) reports a negative relationship between gender diversity on the board of directors and firm
performance, the authors suggest that board of directors with female gender may lead to over monitoring for companies that already
have strong governance in place.
According to the theory of human capital (Zajac and Westphal, 1995), each member of the board constitutes a source of
knowledge, expertise and skills and therefore a source of a better performance.
As well, the conclusions on the participation of women are mixed and in this context Kang et al. (2007) have concluded that the
diversity of gender is a source of improvement of the yields of the company. This conclusion is confirmed by Carter et al. (2003),
Adams and Ferreira (2009), Erhardt et al. (2003) who see that the presence of women is a source of new ideas, a better commu-
nication, creation of an approving debate.
In effect, Singh et al. (2008) conclude that the presence of women presents an asset within the board saw that they are highly
qualified and have a good experience accumulated through their holdings in the board of the small and medium-sized enterprises. So,
the diversity of the genus within the board to improve the image of the company.
Similarly, Farell Hersch (2005) even believe that the increase in the number of women in the advice is especially important to
improve the image of the company in order to attract new investors. In this framework of ideas, in the United Kingdom in 2010, the
participation of women is 12.5% to the board of directors of enterprises comprising the FTSE 100. Similarly, according to Le Figaro
and Reuters (2011) in France, the presence of women in the boards of directors of enterprises comprising the CAC 40 index has
increased between 2009 and 2011 to reach a proportion of 20.7%. Similarly, according to IFA (2006) and Spencer Stuart (2011),
Spain, the feminization rate of the Boards of Directors has increased from 3% to 10% between 2006 and 2011. We posit our
hypothesis:
H4. Board gender diversity and firm's financial performance are positively correlated.
Knowing the average tenure of the CEO can help for the knowing of existing’ possibility of convergence interests or entrenchment
situation by the CEO. However, along with these positive connotations, more significantly, negative aspects can appear (Barroso
Castro et al., 2010). In this respect some studies suggest that long tenures are associated with a higher resistance to change (Musteen
et al., 2006). Golden and Zajac (2001) suggest that extended tenure of board members is associated with a greater rigidity, and can
result in trenching behind existing practices and procedures, with directors distancing themselves from new ideas. Moreover, ac-
cording to Vafeas (2003), board members who serve longer on the board and who therefore have greater experience are more likely
to form friendships and less likely to supervise the management. The information about the CEO tenure would serve to know if the
rotation is relatively common, which gives a notion of efficiency in the functioning of the board of directors. Having established a
relatively short tenures, should help to increase the capacity for monitoring of this body, because of the rotation promotes the
appearance of new people and, therefore, different attitudes and views on certain situations or decisions. In this context, the following
hypothesis is proposed.
H5. There is a negative association between the length of the tenure of the CEO and firm performance.

3. Data and variables measurement

3.1. Data

The data for this study is based on CAC 40 companies. Following prior research like Owusu-Ansah (1998) and Akhtaruddin
(2005), this study is limited to non-financial companies and therefore are ignored four financial institution refers to their different
disclosing requirements in question. The sample period is 2011–2013. The remaining 108 firms representing a significant proportion
(92.5%) of the total population of French firms listed on the CAC 40 respectively comprise the final sample for this study. The sample
composed by firm distributed as follows: 22.2% belongs to the manufacturing sector and the technology sector, followed by firms
engaged in health activities (11.1%). No other general business sector yielded more than 10% of the sample (Basic materials, the
construction and building materials, Gas oil firms represent 8.3%; the trade activities 5.6% while firms pertaining to other tertiary/
service business represent 14% of the sample). Our study seeks to explore the publicly available information, to achieve this, a web-

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Table 1
CAC 40: French companies components our samples distributed by industry.

Industry Code Number of firms in the sample per country and industry

Basic materials (BM) 1 3

Healthcare (Health) 2 4
Manufacturing (Manf) 3 8
Technology (Tech) 4 8
Trade (Trad) 5 2
Construction and building materials (CBM) 6 3
Other services (OS) 7 8
Total 7 36

based search was performed during the fourth quarter of 2014, locating the corporate websites of the sample firms was identified
(Table 1).

3.2. Variables measurement

Our study uses tow financial attributes measures were return on equity (ROE) and return on assets (ROA). The OLS regression
analysis includes both board composition characteristics and firm characteristics.
According to the agency theory the characteristics of the board can affect the quality and firm financial performance. Several
recent theoretical and empirical studies examined this issue such as the studies of Clarkson et al. (2003), Barako et al. (2006) and
Cheung et al. (2010). These features concern: The size of the Board; The presence of independent directors; Duality of functions of
Chief Executive Officer and Chairman of the Board; Number of years that a CEO has been in office as of the company’s end of the
fiscal year; and The gender diversity.
Board Size of directors was measured using the total number of directors in the board (Jackling and Johl, 2009).
The measure of the presence of independent directors the independent directors is the number of independent directors divided by
total board size (Anderson and Reeb, 2003). Director in the board titles containing the terms “independent”, “non-executive” or
“outside” are categorized as independent directors and non-independent for otherwise. Adams and Ferreira (2009) found that the
relation between board size, board independence and gender diversity can be largely mechanical and difficult to interpret.
Mak and Li (2001) argue that when a single individual wears the hats of both the CEO and chairman of the board, that provide the
managerial dominance is greatly enhanced since that individual is more aligned with management than with stockholders. The
duality of functions of Chief Executive Officer and Chairman of the Board is a dummy variable that takes a value of 1 in the presence
duality of functions and zero for otherwise (Hanifa and Cooke, 2002; Gul and Leung, 2004).
Gender diversity measure: calculated by the average proportion of female directors on the boards of the sample firms during the
research period (2011–2013). The use of a multi-period average measure allows better control of changes in board diversity, can
increases the reliability and also makes the analysis more dynamic (Erhardt et al., 2003; Ryan and Haslam, 2005). In addition to the
gender test variable, the study further controls for the effects firm characteristic that have been found in prior research to have an
influence on the financial performance. One departure from most of the earlier research on the board gender diversity is the inclusion
of a control variable for prior performance, as per Erhardt et al. (2003). There are many arguments for adopting this method. Firstly,
as provided by Erhardt et al. (2003), measuring the financial performance at two different points in time better controls for the
market fluctuations and gives more consistent results. Secondly, an implantation of a control for prior financial performance reflects
that the model’ regression captures changes in firm performance from a prior year, and this can mitigates several biases that may arise
due to country-level differences such as the variation in the accounting standards and rules. Finally, the effect of gender diversity on
financial performance occurs over time, and the effect of strategic decision making on firm performance requires many years to
materialize (Carter et al., 2010).
The CEO Tenure measured by the number of years that a CEO has been in office as of the company’s end of the fiscal year.
Under this operationalization of different variables and in order to examine the multiple association between firm’ financial

Table 2
Summarises the dependent and explanatory variables used in this study and their measurement.

Variables Label Definition and computation

Return on equity ROE The return on equity equal to income before extraordinary items scaled by total equities at the end of the year.
Return on assets ROA The return on assets equal to income before extraordinary items scaled by total assets at the end of the year.
Board size BSIZE Number of directors
Board independence BINDP Percentage of independent directors
Duality DUAL Equal to 1 if one individual serves as both chairman and CEO and 0 for otherwise.
CEO Tenure CEOTENUR Number of years that a CEO has been in office as of the company’s end of the fiscal year.
Gender diversity GNDR Percentage of female directors
Leverage ratio GEAR The total debt scaled by total assets at the end of the year.
Firm size LOGCP Is the natural logarithm of total assets at the end of the year.

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Table 3
Descriptive statistics.

Panel A: descriptive statistics of dependent variable full sample (n = 108)

PERFORM Mean Std. Dev. Min Max

ROE: return on equity 0.198125 0.0856976 0.025364 0.312897

ROA: return on assets 0.0470495 0.0315094 −0.059323 0.1

Panel B: comparison between firms that have no female directors and firms that have at least one female director.

PERFORM Num. of female director = 0 Num. of female director N > 0 Difference

Mean Median Mean Median Mean Median

ROE 0,201132 0,202578 0,190983 0,198642 0.010150*** 0.003939***
ROA 0,052277 0,052401 0,03463 0,039867 0.017647*** 0.012534***
Nomber of observations 76 32

Panel C: independent variable full sample (n = 108)

Mean Std. Dev. Min Max

BSIZE 10.81 3.97 3 20

BINDP 0.48 0.34 0 1
DUAL 0.5929 0.401 0 1
CEOTENUR 9.45 9.04 3 12
GNDR 0.238186 0.100077 0 0.4
GEAR 0.445524 0.261107 0.1103 0.8871
LOGCP 7.023048 0.4399864 5.9884 8.2009

performance and boards composition of CAC 40 firms, the generic mathematical equation of our analysis upon which an econometric
model will be utilized for its verification, has the following form (Table 2):

PERFORMit = β0 + β1BSIZEit + β2INDEPit + β3DUALit + β4CEOTENURit + β5GNDRit + β6GEARit + β7LOG-

CPit + INDUSTit + eit (1)

Where; PERFORMit = {ROEit, ROAit}

4. The regression models and results

Panel A in the Table 3 present the descriptive statistics for the dependent variable full sample used in the empirical model. From
the descriptive statistics we observe that on mean the firm performance, respectively for the study’ measurement (ROE, ROA), takes
value of 19,81%, and 4,70495%. The level of financial performance measured by ROE range from 2,5% to 31,29%, whilst, the value
takes by the second measurement range from −5,9% to 10%.
As illustrated in the Panel B of Table 3 summarize the segmentation of the level of financial performance based on the proportion
of female in the board of directors of CAC 40 firms. The table present a significant difference between firms’ financial performance
that have no female directors and other that comprise female gender in the board directors. Indeed, the group of firms with gender
diversity present a high level of financial performance such us measured by ROE and ROA in mean and median values then other
firms without gender diversity. The result reveals significant differences in board characteristics between the sample countries. As
shown in Panel B of Table 3, significant differences exist between firms that have female directors and those that do not. Most
notably, firms with at least one female director outperform firms that do not have any female directors by a mean of 1.76% in ROA
and 1% in ROE. These findings are consistent with previous studies, Mohd Saat et al. (2011) who shows that results show that firms
with women directors perform better than those without women on their boards.
Overall, the board of directors is characterised by a mean of size equal to 10.81 with a mean proportion of independent directors
of 48% and 59% of combination between function of CEOs and Chairman of the Board. Table 3 reports the dispersion of CEO tenure
between the firms of our sample. CEO’s who retain their positions have been at their companies for 9.5 years, on average. Ad-
ditionally, the average length of a CEO’s tenure prior to their departure is about ten years. The mean leverage (GEAR) is high and
amounts to 44.55% of total assets. The mean of firm size (logcp) is 7.01.
Table 4 shows the result regression. The findings found support for H1 (board size). Consistent with Saleh et al. (2005), it can be
said that the board size is positively correlated to the ROE measurement of firm financial performance at the level of 10%. Conse-
quently, it generates positive influence on the managers to mitigate the conflict of interest and personal interest and thus, able to
ensure that the managers are strive to work for the betterment of firm performance. Whilst, it affect none significantly the firm
performance such measured by ROA. The findings support (H1) and provide evidence that larger board size tends to ensure that the
management control of the company is strong with ROE performance’ measurement.

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Table 4
Regression.

Model 1 Model 2

BSIZE 0.706 0.089*** 1.243 0.211

BINDP 3.001 0.092*** 2.555 0.008*
DUAL 1.975 0.007* 1.863 0.092***
CEOTENUR −2.639 0.078*** −5.721 0.036**
GNDR 1.477 0.006* 1.333 0.087***
GEAR −0.986 0.195 −3.312 0.142
LOGCP 1.751 0.056*** 1.111 0.132
R-Squared 0.579 0.542
Adj R-Squared 0.538 0.526
F (7, 100) 9.034 7.865
Prob > F 0.000 0.000

Note: The t-statistics asterisks indicate significance at 0.10 (***), 0.05 (**), and 0.001 (*) levels respectively.

Measured by Percentage of independent directors in the board, it found significantly correlated to the firm performance for both
measurement respectively (ROE; P > 0.05 and ROA; P > 0.01).The board independence (H2) has a significant association to the
performance and subsequently support the expected hypotheses for both measurement of firm performance such us ROE and ROA.
The finding reports that companies having more outside directors in the board are able to improve the firm value because there is no
personal interest being exercised. The above result is contradict with those of Johari et al. (2008) and Mohd Saat et al. (2011) that
gives evidence for a positive impact on performance due to more independent directors refer to the agency problem, think objectively
since they are not hold executive position in firm and that can buy in external expertise which will yield company performance.
Also, the results report a significant and positive effect of duality on the firm performance and subsequently support the expected
hypotheses (H3). These findings are supported by prior researches on the relationship between leadership structure and firm per-
formance. In contrast Leng (2004) and Yasser (2011) reports that the duality leadership structure is not significant for the firm
performance.
Similarly, the CEO tenure was found to have a negative significant impact on the firm performance for both measurement of
performance. This implies that if the CEO tenure increases by one year, the firm performance will decrease by about respectively (for
ROE measure: −2.639; and ROA measure −5.721). These negative aspects of COE tenure are supported by prior studies that have
been conducted to investigate the relationship between CEO tenure and firms’ performance found mixed results (Vafeas 2003;
Barroso Castro et al., 2010).
The literature argues that gender diversity in the board of directors adds value by improving board monitoring, providing board of
directors’ capital and legitimacy, bringing more perspectives to the table, enhancing the collaboration and mentoring of managers
and improving the relationships with stakeholders. The results, presented in Table 4, indicate a positive association between board
gender diversity and ROE (Model 1) and ROA (Model 2). These significant results may be due to the fact that gender diversity and
argues to support the expected hypotheses. In similar vein, using data on Spanish Board of Directors composition, Campbell and
Minguez Vera (2010) provide that the percentage of women in the Board has a significantly positive impact on Tobin’s Q value.
Adams and Ferreira (2009) also report the positive effect of female directors on firḿs outcomes,
Dobbin and Jung (2011) analyze whether effect the presence of female directors in the Board affects the company’s profit and
stock performance, their idea was motivated by the fact that women have been holding an increasing number of Board seats in U.S
firms. The authors provide that firms with high number of women in the Board of Directors do not experience any increase or
decrease in performance. On the other hand, the change in the number of female Board members appears to be significant for
institutional investors.
Smith et al. (2006) stated the advantages that can be generated by the presence of gender diversity in board, where the women
directors may better understand particular market conditions than men, which may bring more creativity and quality to board
decision making. Indeed, higher gender diversity on the board may generate a better public image of the firm and enhance firm
performance. Also, it is possible that the involvement of gender diversity in board explore external talent pool. Furthermore, the
number of female top managers may positively influence the career development of women in lower positions by motivate them as
inspiring model.

5. Conclusion

Several previous studies suggest that firm performance is significantly associated with board of directors’ composition and
structure. Using ROE and ROA as the proxy for firm performance, the purpose of the study specifically is to investigate the re-
lationship between the boards’ size, board independence, CEO duality, CEO tenure and gender diversity and tow measurement of
performance in listed companies in CAC 40 for the period of 2011–2013. Referring to the literature review of corporate governance
there are two alternative perspectives about the CEO duality; the agency theory advocates that the separation of the two roles is an
important determinant to a board’s independence and effectiveness. In contrast, the stewardship theory postulates that firms with a
unified leadership structure operate more efficiently through better coordination and unambiguous command, thus deal more ef-
fectively with strategic challenges. The leadership structure of CAC 40 companies is mostly characterised by the separation of roles of

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CEO and chairman and the mandatory turnover of CEO tenure.

The current study has both theoretical and practical implications. First and foremost, it takes considers the interactions between
the board composition and firms characteristics when studying their effect on firm performance. Second, the empirical results show
that firm financial performance increases with board independence, duality leadership structure and gender diversity firm size, and
decreases with leverage level among French listed firms during the study period. The paper established how firm performance
measuring shed light on the impact of board of directors’ composition, firm size and leverage. The findings of the study reveal that
most out of the relationship expected are supported with a high level of significance.
The suggestion in previous literature that French companies had a greater concern with financial matters was reinforced in the
sample studied in this research. Investigating the factors of board’s effectiveness with multiple theoretical lenses may help develop
more effective corporate governance models. In view that our study is a first step in many regards, its limitations should be noted for
example, this study is based on CAC 40 firms. However, a large sample and more recent data are required.

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