Board Structure and Corporate Performance in Malaysia

By Z. Abidin, Nurmala Mustaffa Kamal, Kamaruzaman Jusoff. 2009

335 citations recorded by the source corpus.

This study examines the association between board structure and corporate performance, where performance is defined as the value added (VA) efficiency of the firm’s physical and intellectual resources rather than the more commonly used financial terms or profitability ratios. It is argued that the inclusion of intellectual elements into the measurement provides a long-term measurement of corporate performance. The VA efficiency of the firm’s total resources is calculated using the Value Added Intellectual Coefficient (VAIC) methodology developed by an Austrian, Ante Pulic. The four board characteristics that are of interest in this study are board composition, directors’ ownership, CEO duality and board size. Based on a randomly selected sample of 75 companies listed on Bursa Malaysia, it is found that board composition and board size have a positive impact on firm performance, while the effects of directors’ ownership and CEO duality on the VA efficiency of firm’s total resources are not established. The outcome of the study shows that the emphasis on the importance of outside directors on the board by The Malaysian Code on Corporate Governance and by the requirements of Bursa Malaysia is deemed pertinent to the long-term corporate performance.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/7f172decf79bc976f1f5a9d2e1e6685a5ef58bdb

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Citations in the corpus

Intellectual capital and financial performance: an evaluation of the Australian financial sector (2013, result): “Company size significantly influences the ROA of sample companies and confirms the results of the prior studies (Abidin et al., 2009; Calisir et al., 2010).”
Does Board of Director’s Characteristics Affect Firm Performance? Evidence from Malaysian Public Listed Companies (2012, methodology): “Specifically, the ROE model used in this study is consistent from prior studies (Zubaidah et al., 2009; Hashim & Devi, 2010).”
The effect of intellectual capital on firm performance: an investigation of Iran insurance companies (2012, methodology): “B Financial leverage (LEV): calculated through dividing total liabilities by book value of total assets, included in order to control the effect of liabilities on firms’ performance (Lev and Sougiannis, 1996; Abidin et al. 2009).”