13.4.1 Conclusion

The literature review of forty-eight studies in this section does not reach consensus on the relationship between board independence and financial company performance. Although fifteen studies find positive relationships and confirm the hypotheses of the agency theory and TCE theory about a positive relationship between board independence and performance, seventeen other studies confirm the hypothesis of the stewardship theory about a negative relationship between the two variables, and sixteen other studies report mixed relationships. It cannot be concluded that the importance attributed in the agency theory and TCE theory is correct; neither can it be concluded that the opposite is true. Based on this literature review there is no undisputed relationship between independence and performance.

The results of the meta-analysis with a sample of 52,182 company year observations of 43 studies from the last decade about the relationship between board independence and various measures of financial performance show a significant negative relationship between board independence and performance. Both ROA and Tobin’s Q correlations show these significant negative relationships. When a pure distinction between accounting-based and market-based performance measures is made, only the accounting-based performance measures remain significantly negative. The results for the market-based measures are negative as well, but not significant. These results entail that the claims of the agency theory and TCE theory about the positive influence of independence on financial performance seem to be incorrect; and it shows that the importance of independence attributed by agency and TCE theorists cannot be substantiated with empirical results. The claim of the stewardship theory about the negative relationship between board independence and performance and the lack of importance attributed in this economic theoretical framework are supported by the results in this meta-analysis.

Furthermore, independence fulfils certain demands from society or the people within a country. Whether this really does contribute to the well-being of the inhabitants has never been the subject of research. The consequences from a groupthink perspective cannot be doubted. Empirical research has never been able to replicate groupthink situations completely and it is therefore not clear whether these measures of independence do indeed lead to a better performance of the board of a company.