Independent non-executive directors, managerial ownership and firm performance in Malaysian public listed companies
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Date
2005
Authors
K. Vethanayagam, S/O Kanapathy
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Abstract
Leung and Horwitz (2004) argued that the failing of corporate governance and lack of transparency are often associated with the Asian financial crisis. Therefore, this study attempt to examine the relationship between independent non-executive directors and managerial ownership towards firm performance, as measured by Tobin’s Q. Sample consisted of 220 Main Board companies listed on the Bursa Malaysia in the year 2003. The study found the number of independent non-executive directors that on the board does not contribute to firm performance. The study also reveals that the compliance level of one-third of independent directors to PLCs as required by Bursa Malaysia’s listing requirement is satisfactory. Using piecewise linear regression analysis, this study captured non-linear relationship between managerial ownership and Tobin’s Q. However, the interaction effects between independent non-executive directors and managerial ownership on firm performance was not found to be significant.
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Keywords
Business Administration , Managerial Ownership , Firm Performance