Ownership, board structure, and performance in continental Europe

This study examines the empirical validity of claims that the composition of boards of directors and ownership structures affect firms' profitability ratios (ROE, ROA, MTB) using data from 87 European firms, which were foreign U.S. registrants during 2000–2001. Results indicate a strong positive relation between the level of relational ownership and profitability ratios, and between the portion of independent directors on the board and profitability ratios. No strong relation was found between the portion of inside directors or level of managerial ownership and profitability in continental European companies.