After the emergence of the Cadbury Report in 1992, several countries in the EU, including
Denmark, issued their own guidelines of corporate governance. However, whether such
recommendations benefit shareholders is a controversial question. This article presents
an empirical analysis of financial performance and the composition of semi-two-tier
boards using a unique sample of Danish listed firms. It is shown that board size,
proportion of insiders and positions held by board members in other firms do not
significantly impact performance. Only
the average age of the board has a significantly negative impact on performance.
Thus, it is argued that board structure only plays crucial role when a firm is in
financial trouble or faces a major threat – not under normal circumstances.