Board effectiveness and school performance: a study of Australian independent schools

ABSTRACT

This study examines whether board diversity, board practices, and principal influence over board decisions impact board effectiveness across independent schools in Victoria, Australia, and to what extent board effectiveness is associated with academic and financial performance of the schools. Analyses were based on survey data from board Chairs and board members within independent schools. Results show that diversity of board composition and board practices contribute to increased board effectiveness, whereas board effectiveness is less robust in schools with stronger principal influence over board-level decision making. The results provide an indication that while some board attributes (i.e., diversity of board composition and board practices) indirectly influence school performance through their positive association with board effectiveness, excessive influence of the principal over board-level decisions may impair board effectiveness.

KEYWORDS:

• Board diversity
• board practices
• principal influence
• board effectiveness
• school performance
• independent schools

Acknowledgements

We would like to thank the Independent Schools Victoria Association for their feedback on the survey instrument. We also thank the participants at the 2019 European Accounting Association (EAA) Congress and the 2019 American Accounting Association (AAA) for their comments and suggestions on our paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 These universities are called the “Group of Eight (Go8)”, which are Australia’s leading research-intensive universities.

2 Items eliminated due to very low loadings include BD4,5 for board diversity, PI5 for principal influence, BE8, 10,12,16,17 for board effectiveness, AP9,10 for academic performance, and FP1,2 for financial performance.

3 Items eliminated due to cross loading (i.e., less than 0.2 from primary factor) include BP4,6,7 for board practice, BE2,3 for board effectiveness, and FP3,8 for financial performance.

Additional information

Notes on contributors

Chin Moi Loh

Chin Moi Loh is an Assistant Professor of Accounting. Her research focused on corporate social and environment reporting, sustainability reporting, corporate governance, and associated accountability. She has a particular interest in the effect of corporate board related accountability.

Luisa Unda

Luisa Unda is an Adjunct Lecturer at the Department of Accounting, Monash University, Australia and an Assistant Professor at the Business School of Mannheim, Germany. Her research interests include corporate governance in unique ownership structures, the role of ownership and board characteristics on firm outcomes, and determinants of board effectiveness. Luisa’s research is contributing to increased understanding of governance practices in non-profit organisations.

Zhiyun Gong

Zhiyun Gong is a Lecturer in the Monash Business School. Her key research interests are management control systems, risk management, corporate governance, and leadership and organizational culture. She has taught management accounting and AIS subjects at undergraduate and postgraduate level in Australia, and has six publications in the areas of management accounting and AIS.

Kelly Benati

Kelly Benati is a Lecturer in the Monash Business School focusing on Work Integrated Learning. Her key research interests are corporate governance, diversity, employability, and WIL. She has taught management subjects at undergraduate and postgraduate level in Australia and Asia. She has also served on the Board of Directors of the largest public hospital network in Melbourne.