The impact of board characteristics on financial performance in an emerging economy: the moderating role of nomination and remuneration committee

Purpose This study investigates the moderating role of nomination and remuneration committees on the relationships between board characteristics and the financial performance of listed textile businesses in Bangladesh. Design/methodology/approach The study utilises the theoretical frameworks of agency, resource dependence and stakeholder theories. The study investigates the moderating effect of nomination committees using regression analysis by evaluating a sample of 270 firm-year observations from 2016 to 2021. Findings The results reveal that nomination committee presence enhances the performance benefits of larger board size and frequent meetings but negatively reinforces the detrimental effects of excessive independent directors lacking firm-specific expertise. Female board representation demonstrates an unexpected negative association, implying suboptimal selection. Research limitations/implications Overall, nuanced moderating effects of nomination committees on board characteristic-performance relationships are evidenced. This timely study contributes empirical evidence on an underexplored area and provides a foundation to advance academic literature on the linkages between nomination committees, corporate boards and firm-level outcomes. Further research avenues are highlighted. Practical implications The findings have salient implications for enhancing board competency and engagement, reforming nomination committee policies towards competency-based nominations and discouraging token appointments to fulfil regulatory mandates on board diversity. Originality/value This is the first study to provide insights into the moderating effects of nomination committees on board characteristic-performance relationships in Bangladesh’s textile industry.