Board Structure as an Antecedent to Effective Board Leadership, Board Responsibility, and Sound Board-Management Relationship

Abstract

This study examines the influence of board structure both on board responsibilities and board-management relations in the context of the Ethiopian banking sector. It also attempts to add to the existing empirical evidence by analyzing the relationship between board structure and board leadership and determining whether board leadership mediates the relationship between board structure and board responsibilities, as well as between the boards and the top management team. The researchers used 106 sampled respondents from the boards of directors and CEOs of both private and public banks for the study. The study used the partial least square (PLS) structural equation modeling technique of data analysis. The test results showed that the board structure is a good predictor of board responsibility, board-management relationships, and board leadership. Furthermore, the findings revealed the direct and significant influence of board leadership on board responsibility and board-management relationships. The test also demonstrated the mediating role of the board leadership between the board structure and both board responsibilities and the board-management relationship. The model, analysis, and findings will shed light on the empirical results and could be mainly useful in assessing corporate governance in the context of emerging economies.