Structuring Corporate Boards: Some Facts and Determinants from the Macedonian Setting
Structuring Corporate Boards: Some Facts and Determinants from the Macedonian Setting

Summary/Abstract: Purpose: Many researchers claim that split has a positive effect on stock returns. However, if we observe more closely, we notice that this is only an accounting procedure. Therefore, the question arises as to whether stock prices should change. To answer this problem, we checked the market reaction to the division of shares on the Warsaw Stock Exchange. Methodology: To verify our hypotheses, we used the event study analysis. Based on the Sharpe market model, we assumed that the price of the asset determines systematic risk and specific risk. Findings: On the basis of conducted analyses, we found a positive market reaction to the first split information, while the announcement of General Meeting of Shareholders (GMS) resolutions generated a price correction. Moreover, split events initially caused an increase in abnormal returns. The research results are consistent with the efficient market hypothesis. Research limitations: The sample size does not give an opportunity to check the impact of economic cycles. During the last 15 years, we found only 75 events of splits without any disruption event. Originality: Analysis of three dates: information about the planned general meeting of shareholders regarding the split, publication of decisions taken at the general meeting, and the day of the split.Purpose: Knowing the factors that might affect board structure is an important step in understanding boards and their role in corporate governance. This research aims to examine the effect of firmcharacteristics closely related to corporate governance mechanisms, such as the model of corporategovernance, shareholder capital concentration, and stock exchange listing on board structure variables (size, independence, and gender diversity).Methodology: The sample of this study stems from large Macedonian joint-stock companies. We runa hierarchical linear regression of board characteristics on common demographic firm characteristics as control variables and contextual firm characteristics related to corporate governance mechanisms as independent variables.Findings: Joint-stock companies in the Republic of North Macedonia have relatively small boards,which provide no positive effects that would originate from the larger number of board members.Moreover, the number of outside independent members is small, insufficient to influence the boardswith greater objectivity, independence, and quality. Larger companies with a one-tier model havestatistically significant larger corporate boards and a larger number of independent directors.Implications: The best corporate governance practices worldwide must be used as a basis for futureimprovements of corporate governance in joint-stock companies in developing economies.

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