The impact of the board process on board and corporate performance: the case of Slovakia

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Nowadays a great deal of attention is paid to corporate governance (CG). Frequent takeovers of ownership rights by management bodies led to a need for business owners to establish clear rules for business management and compliance monitoring. The aim of this paper is to examine the relationship between selected characteristics of the governance process and the ability of governing bodies to perform their core tasks, as well as to model and predict the impact of the selected characteristics of the governance process on the company’s financial performance, measured by the year-on-year change in return on equity. The respondent sample consists of members of randomly selected top management entities with their headquarters in Slovakia. A total of 132 subjects participated and answered questions in the survey, 54% of which were joint stock companies, 36% were limited liability companies and 10% were respondents from cooperatives. Data were personally collected by a questionnaire survey conducted during 2019. To verify the assumptions and success of the formulated model, correlation analysis, binary logistic regression and other relevant tests were used. The results show that each of the examined board process attributes significantly affects at least one board performance attribute. All significant correlations have a positive value. Independent variables in the ROE regression model increased the estimation rate of ROE change from 54.5% to 93.9%. The model is applicable in the CG practice and allows the prediction of changes in ROE with respect to ongoing governance processes.

Acknowledgment
This paper has been supported by the Scientific Grant Agency of Slovak Republic under the project VEGA No. 1/0749/18 “Research on the application of corporate governance principles in companies in Slovakia”. The authors would like to express their gratitude to the Scientific Grant Agency of The Ministry of Education, Science, Research and Sport of the Slovak Republic for financial support of this research and publication.

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    • Table 1. Logistic regression
    • Table 2. Hosmer-Lemeshow test results
    • Table 3. Omnibus tests of model coefficients
    • Table 4. Classification table
    • Table 5. Coefficients
    • Table 6. Variables in the equation
    • Table 7. Descriptive statistics and case summaries
    • Table A1. Description of variables
    • Table A2. Correlation analysis of variables
    • Conceptualization
      Janka Grofcikova
    • Data curation
      Janka Grofcikova
    • Formal Analysis
      Janka Grofcikova
    • Investigation
      Janka Grofcikova
    • Methodology
      Janka Grofcikova
    • Project administration
      Janka Grofcikova, Hussam Musa
    • Resources
      Janka Grofcikova
    • Software
      Janka Grofcikova
    • Supervision
      Janka Grofcikova, Hussam Musa
    • Validation
      Janka Grofcikova
    • Visualization
      Janka Grofcikova
    • Writing – original draft
      Janka Grofcikova
    • Writing – review & editing
      Janka Grofcikova
    • Funding acquisition
      Hussam Musa