The Relationship between Board of Directors’ Characteristics and Financial Stability of Firms Listed on the Stock Exchange of Thailand

Abstract

This study examines the relationship between board of directors’ characteristics and the financial stability of firms listed on the Stock Exchange of Thailand. Financial stability is measured using the Piotroski F-Score, which is derived from nine accounting-based indicators covering three key dimensions: profitability, liquidity and leverage, and operating efficiency. The board of directors’ characteristics investigated in this study include board size, the proportion of independent directors, CEO duality (where the CEO also serves as the Chair of the Board of Directors), the proportion of female directors on the board of directors, and the frequency of board of directors’ meetings per year, with firm size and firm age included as control variables. Data are analyzed using multiple regression analysis. The sample consists of firms listed on the Stock Exchange of Thailand over the period 2023–2024. The data are collected from firms’ annual reports and the LSEG database, yielding a total of 655 firms and 1,310 firm-year observations. The results reveal a statistically significant positive relationship between board size and the Piotroski F-Score (the model has an R-squared value of 0.066), suggesting that firms with a larger board of directors may benefit from a greater diversity of expertise and experience, which contributes to stronger financial stability. In contrast, the frequency of board of directors’ meetings is found to have a statistically significant negative relationship with the F-Score. This finding may indicate that firms experiencing lower financial stability tend to convene board of directors’ meetings more frequently to address emerging financial concerns. Overall, the findings provide empirical evidence on the role of board of directors’ characteristics in explaining financial stability and offer practical implications for corporate governance practices among listed companies, as well as for managers, investors, and regulatory authorities.