independent directors – Jurnal Pengurusan

Board of Directors’ Tenure and Firm Performance: Evidence from Malaysia

asriwn — Wed, 16 Jul 2025 06:37:08 +0000

Considering the prevalence of government-linked and family-owned firms in Malaysia, as well as recent financial scandals, understanding how board directors’ tenure affects firm governance and performance is crucial. Therefore, this paper examined the impact of director tenure on firm performance in Malaysia, focusing on four types of directors: chairman, executive director, independent director, and affiliated director. Drawing on Agency Theory and Resource Dependence Theory, we analyzed data from the top 300 non-financial firms listed on the Main Board of Bursa Malaysia from 2017 to 2019, using ROE, ROA, and Tobin’s Q as indicators of performance. Our findings show a significant positive association between chairman tenure and all three firm performance measures. In contrast, the tenure of independent and affiliated directors is negatively associated with Tobin’s Q, while executive directors’ tenure is not statistically significant for any performance measure. These findings highlight the varying effects of director tenure on governance and firm outcomes. This study offers important insights for academics, policymakers, and practitioners, particularly regarding the need for regulatory reforms. We recommend that regulators, such as Bursa Malaysia and Securities Commission Malaysia, reassess and tighten the definitions and tenure limits for independent and affiliated directors to strengthen board independence and enhance governance quality.

An Empirical Study of Auditors Switching, Corporate Governance and Financial Performances of Malaysian Public Listed Companies (PLCs)

Amirulilul — Tue, 11 Oct 2022 06:53:16 +0000

In the past years, regulators and the business communities had expressed worries about the alarming rate at which firms or corporations collapse due to the mismanagement and manipulation of resources as seen in the cases of Enron, WorldCom in the United States of America; and to be specific in Malaysia, the cases of Megan Media Holdings Berhad and Transmile Group. Auditor switching is evident and the disorder of auditor switching often takes place in Malaysia; however, as time goes by, it is decreasing. Thus, this paper seeks to empirically examine the effect of auditor switching and corporate governance on financial performance of Malaysian PLCs. Secondary data on a total number of 100 PLCs from years 2009 to 2013 are used. The results reveal that the effect of auditor switching on performance does not vary with duality role and the board size. However, the independent director does not cause a good firm performance. Nonetheless, auditors do not have a direct effect on financial performance since they are not directly involved with the management of the firms which negates the results of previous study. Therefore, this paper has vital impact in that regulators and the public need to be educated through awareness campaigns to emphasize on the auditors’ roles as agents in understanding the impact of the association between corporate governance and financial performance. Furthermore, auditor switching should embrace not only rotation of audit partners, but rotation of audit firms as well in view that this will help in infusing discipline from the top to the bottom of the audit firms and the companies.

The Moderating Effects of Independent Directors’ Human Capital on the Relationship between Related Party Transactions and Firm Performance: Evidence from Malaysia

SITI HASLINA TON ZAINAL ABIDIN — Sat, 08 Oct 2022 11:44:14 +0000

The purpose of this study is to examine the effect of related party transactions (RPTs) on firm performance and whether this effect is moderated by independent directors’ (INEDs) presence and their human capital (i.e. functional and firmspecific knowledge). Based on a sample of 300 non-financial firms listed on Bursa Malaysia for 2013, this study found that RPTs in general, have a positive effect on firm performance and this effect varies according to the parties involved in RPTs. Specifically, this study found that firm performance is higher for RPTs involving subsidiaries, associates and joint ventures. The findings support the efficient transactions hypothesis that RPTs can create value to the firm. INEDs’ presence and INEDs’ functional and firm-specific knowledge are found not to have any moderating effects on the RPTsfirm performance relationship. Therefore, the agency, resource dependence and human capital theories that stress on the importance of INEDs as corporate monitor and advisor are not supported. This study, perhaps the first, explains the interaction effects of INEDs’ functional and firm-specific knowledge on RPTs-firm performance relationship.