ROLES OF BOARD OF DIRECTORS: EVIDENCE FROM MALAYSIAN LISTED COMPANIES

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Hasnah Kamardin ORCID logo, Hasnah Haron

https://doi.org/10.22495/cbv5i1art3

Abstract

This study examines the extent of roles played by the board of directors (BOD) in Malaysian listed companies and the significant differences on the roles based on the company characteristics and board characteristics: firm size, leverage, growth, firm performance (ROA), family controlled companies, and CEO duality. Data are gathered from two sources whereby questionnaires are used to ascertain the extent of BOD participation in the board roles in the financial year 2006 and companies’ annual reports are used to gather financial and board data. Using a sample of 112 companies, descriptive analysis shows that BOD mostly performs greater monitoring roles, other than performance evaluation. Strategy roles focus more on reviewing company’s strategic plan and defining company’s vision. Outside directors are required to focus on protecting shareholders’ interests, provide a balanced view, and have strategic thinking capabilities. The results of t-test analysis indicate that to some extent the roles played by the BOD are significantly different in terms of firm size, firm performance and family companies. The results have some implications to the corporate governance practices.

Keywords: board roles, board performance, monitoring, strategy, resource dependence, family companies, CEO duality

How to cite this paper: Kamardin, H., & Haron, H. (2009). Roles of board of directors: Evidence from Malaysian listed companies. Corporate Board: role, duties and composition, 5(1), 22-36. https://doi.org/10.22495/cbv5i1art3