Journal of Business & Economic Policy

Corporate Governance, Board Structure and Firm Value: A Review of Literature
Esther Nkatha M’ithiria (DBA-ST), Prof Danson Musyoki (PhD), Ken Shawa (PhD)

Abstract
This paper reviews both theoretical and empirical literature on the relationship between board structure and firm value. Focusing on the theoretical literature it provides an overview of the dominant theories on the board structure –firm value debate. The review reveals that although agency and the resource dependency are the main theories, they do not provide a comprehensive explanation of the effect of board structure on firm value. Further, the empirical review shows that documented evidence does not provide conclusive results on the association between corporate governance, board structure and firm value. Additionally, the methodologies adopted in the reviewed empirical studies differ. Further, most of the studies are concentrated in developed and emerging economies while developing countries tend to be lagging behind. In view of the differences in methodologies and the inconclusive evidence, this paper concludes that the debate on the relationship between board structure and firm value is far from over. Consequently, the paper suggests that further studies need to be carried out using more advanced techniques and focusing on developing economies

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