Financial crisis, board composition and performance of Indian SOEs

Board of directors serve as the most crucial internal mechanism to enhance the performance of state-owned enterprises (SOEs). The current economic downturn questions whether the composition of the SOEs board can effectively enhance their performance not only in the pre-crisis and crisis period but also in the post-crisis period. Hence, the study aims to investigate the effect of board composition on the performance of 19 well-governed Indian SOEs for different periods, i.e., the pre-crisis (2001-2007), the crisis (2007-2009) and the post-crisis (2009-2019). Board composition includes board size, executive directors, nominee directors and independent directors. The performance parameter of the study is return on assets. The results depict that during the financial crisis, SOEs with large boards, more nominee directors, less executive and independent directors performed better. Similarly, in the aftermath of the crisis, instead of large boards, Indian SOEs with small boards have been found to perform better.