This paper models the composition of New Zealand boards of directors as a function of alternative corporate governance mechanisms, other control variables, and legislation designed to improve corporate monitoring. We find evidence that board composition and firm performance jointly impact each other in a positive manner. We document that the proportion of outsiders on the board is positively related to board size and is negatively related to future growth, nonlinearly related to inside ownership, and is not related to debt and ownership concentration. Firm performance is inversely related to firm size, positively impacted by future growth, and appears to be nonlinearly related to insider ownership. Passage of the new Companies Act in 1994 is associated with increased representation of outside board members. However, this increase is not associated with enhanced firm performance which may be a consequence of increased liability placed on directors.