4.3.7. Board Independence and Firm Performance

As a whole, a negative relationship was traced between independent directors and firm performance. However, this negative effect was evidenced only with ROA for the case of family firms, and Tobin's Q with non-family firms. This contradicts previous studies of Yasuhiro et al. (2016) and Arikawa et al. (2017) that report a positive relationship between independent directors and firm performance for Japanese firms. In our study, the average number of independent directors is 15.142 for non-family firms, and 10.941 for family firms. Possibly, too many independent directors may have a side effect on firm performance, as they kill time for communication and making decisions. Thus, the hypothesis (H7) is not approved. We also note that the optimal size of independent directors on the board is still a complicated matter, depending on various factors and firm characteristics, and requires further study.

As for control variables, factors such as firm size and cash flows from operating activities were found to be positively and significantly associated with Tobin's Q of both family and non-family firms. By contrast, leverage tends to inhibit the performance of family and non-family firms in both the accounting-based (ROA) and market-based (Tobin's Q) measures of firm performance. Table 7 summarizes our regression results for predefined hypotheses.


**Table 7.** Summary of findings with hypotheses.

Note: \*\* meaning *p*-value is less than 0.01; \* meaning *p*-value is less than 0.05. + represents a positive but insignificant relationship, while − indicates a negative and insignificant relationship.

#### *4.4. Robustness Test*

Table 8 presents regression results from the random effect model after controlling for time and industry effects. The regression results on ROA and Tobin's Q yield relatively consistent estimates with the regression results reported in the fixed-effect model. However, there are a few exceptions. For family firms, board independence that showed a significantly negative effect on ROA in the fixed-effect model disappears. Furthermore, foreign ownership appears to be a significant variable to improve the performance of all firms. In addition, institutional ownership, which showed no relationship with ROA in the fixed-effect model for family firms, turns out to be a significant and positive factor for the same.
