5.1 Introduction

The literature review in the previous chapter has not been able to formulate a conclusion about the relationship between independence and company performance. Therefore, the question whether the importance of independence attributed by agency theorists and TCE theorists, as described in chapter 3, is correct could not be answered. The agency theory and TCE theory conjecture that higher levels of board independence have a positive influence on the financial performance of companies. In contrast, the stewardship theory does not consider independence to be important and hypothesises that low levels of board independence are beneficial to the financial performance of companies. The inability of a literature review to formulate a conclusion, based on studies with different outcomes, variation in these outcomes, different sample sizes and other differences, underlies the lack of a conclusion in chapter 4 about which economic theoretical framework – the agency and TCE theories or the stewardship theory – is right. Therefore, this chapter uses meta-analytical techniques to deal with the differences in prior research, correct for these differences and formulate an answer to the research question. The qualitative description of chapter 4 is extended with a quantitative analysis of the relationship between board independence and performance. It shows whether the relationship between independence and performance is indeed positive, as conjectured by the agency and TCE theories, or negative, as conjectured by the stewardship theory.

Prior to the meta-analysis, section 5.2 describes prior meta-analytic research in this field. Section 5.3 describes the meta-analytical methodology applied, the advantages and disadvantages of meta-analyses, the sample and the calculation methodology. Subsequently, section 5.4 presents the results and, finally, section 5.4 concludes this chapter.