Board Structure as an Antecedent to Effective Board Leadership, Board Responsibility, and Sound Board-Management Relationship

Abstract

This study examines the influence of board structure both on board responsibilities and
board-management relations in the context of the Ethiopian banking sector. It also attempts
to add to the existing empirical evidence by analyzing the relationship between board
structure and board leadership and determining whether board leadership mediates the
relationship between board structure and board responsibilities, as well as between the
boards and the top management team. The researchers used 106 sampled respondents from
the boards of directors and CEOs of both private and public banks for the study. The study
used the partial least square (PLS) structural equation modeling technique of data analysis.
The test results showed that the board structure is a good predictor of board responsibility,
board-management relationships, and board leadership. Furthermore, the findings revealed
the direct and significant influence of board leadership on board responsibility and boardmanagement relationships. The test also demonstrated the mediating role of the board
leadership between the board structure and both board responsibilities and the boardmanagement relationship. The model, analysis, and findings will shed light on the empirical
results and could be mainly useful in assessing corporate governance in the context of
emerging economies.