Board Characteristics, ROA, and Firm Performance: A Mediation Analysis

DOI

10.2991/978-2-38476-559-1_14How to use a DOI?

Keywords

Board Governance; Financial Performance; Director Independence; Asset Returns; Market Valuation; Mediation Analysis; PLS-SEM

Abstract

This investigation explores the intricate relationships between corporate governance structures and firm valuation, with particular emphasis on how financial performance metrics serve as intermediary variables. The research focuses on three primary governance elements: board size, director independence, and gender diversity. We use Partial Least Squares Structural Equation Modelling (PLS-SEM) methodology to examine both direct associations and mediated pathways between governance variables and firm valuation outcomes. The study analyses data from 110 companies listed on the Nifty Midcap 150 Index, focusing on the automotive and healthcare sectors from 2020 to 2024. Results demonstrate that board composition size and gender representation show limited statistical significance in directly affecting Tobin’s Q, whereas director independence shows a positive indirect effect via Return on Assets (ROA). These findings suggest that independent board oversight enhances operational efficiency, subsequently improving market-based valuation measures. The mediation analysis reveals that ROA is a critical transmission mechanism, with a path coefficient of 0.589 (p < 0.001), while stock returns show minimal mediating effects. This research advances theoretical understanding of governance-performance relationships and offers empirical insights to optimise board structures and enhance organisational value creation. The study contributes to agency theory by demonstrating that governance mechanisms operate through complex indirect pathways rather than simple direct relationships.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - N. Rakesh
AU  - Pooja Kumari
PY  - 2026
DA  - 2026/04/19
TI  - Board Characteristics, ROA, and Firm Performance: A Mediation Analysis
BT  - Proceedings of the Global Innovation and Technology Summit “AAROHAN 3.0”_HSS track (GITS-HSS 2025)
PB  - Atlantis Press
SP  - 201
EP  - 218
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-559-1_14
DO  - 10.2991/978-2-38476-559-1_14
ID  - Rakesh2026
ER  -