Document Type
Conference Item
Publication Date
9-1-2009
Abstract
This paper examines the relationship between board independence and firm performance in Malaysia. The Malaysian Code of Corporate Governance states that at least one third of board members must be independent. Hence, this evolves the question of whether increased board independence can contribute to better performance. This study proves that those corporations which have more independent board members(more than one third of board members which is obligatory)have better firm performance. We included randomly selected 120 public listed companies in Malaysia’ Stock Exchange Board (KLSE), where the performance is measured for the financial year 2006. While this work has been successfully established this positive relationship, it acknowledges the fact, that there are shortcomings. They include only three independent variables, such as independent board members, board size and firm size. Furthermore, the study is only done for one year, and it only involves 120 companies. Although the number of companies is enough to represent corporate Malaysia, a larger sample size will provide better justification for the empirical findings. Considered all these facts, we can provide strong evidence and conclude that a higher number of independent board members may significantly lead to higher business performance.
Keywords
Keywords: Malaysia, Corporate Governance, Board Independence, Firm Performance
Divisions
Faculty_of_Business_and_Accountancy
Event Title
International Conference on Malaysia: Malaysia in Global Perspective
Event Location
Cairo University, Egypt
Event Dates
27-28 September 2009
Event Type
conference