Corporate Finance and Governance: The Effect of Board Composition on Financial Decision-Making

This study examined the impact of board composition on financial decision-making in corporate governance. Using a sample of 500 publicly traded companies from 2010 to 2024, we analyzed the relationship between board characteristics (size, independence, diversity) and financial outcomes (return on assets, debt-to-equity ratio, dividend payout). Employing partial least squares structural equation modeling (PLS-SEM), our findings revealed that board independence and diversity positively influenced financial performance and risk management. However, board size showed a non-linear relationship with financial outcomes. These results contribute to the ongoing discourse on optimal board structures and their role in enhancing corporate financial governance.