The link between performance and changes in the size and stability of a firm's officers and directors

If corporate governance works effectively, size and stability of the firm's officer/director group will be sensitive to firm performance. This should be most evident during periods of unusual firm performance and so we focus on a sample of 9817 firms drawn from 52 countries with 2001 performance measures and officer/director effects in the following 12-month period. Cross-sectional analysis indicates a positive relationship between prior period performance and changes in size and stability of the officer/director group. While the change in size relationship appears to be explained by the USA firms in the sample, the stability relationship is more broadly based. We also find that these results are sensitive to legal system with a firm's officer/director group showing greater sensitivity to past performance in common law countries.