Corporate control in emerging markets: The non-linear dynamics of foreign board involvement

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Abstract

This study examines the complex dynamics of foreign board membership in corporate governance within 266 family-owned corporations in Indonesia and Malaysia. By employing multiple regression analysis, we have determined a turning point in the level of foreign board representation. Once this threshold is surpassed, the advantages of governance start to diminish, indicating the necessity for a more balanced and diverse board composition. Surprisingly, the presence of women on corporate boards did not have a significant effect on governance practices. The findings indicate that although foreign expertise might be advantageous, relying too much on it can have negative consequences. These observations encourage a reassessment of the makeup of boards in developing economies, suggesting areas for further investigation into governance methods in different types of organizations and cultural contexts.

Keywords: Corporate Governance, Family-Owned Corporations, Board Composition

Authors’ individual contribution: Conceptualization — Y.A. and M.M.; Methodology — Y.A. and M.M.; Formal Analysis — Y.A. and M.M.; Writing — Y.A. and M.M.; Project Administration — Y.A. and M.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, M14, G32, O16, F23

Received: 25.01.2024
Accepted: 19.04.2024
Published online: 23.04.2024

How to cite this paper: Anwar, Y., & Mulyadi, M. (2024). Corporate control in emerging markets: The non-linear dynamics of foreign board involvement. Corporate Ownership & Control, 21(2), 45–51. https://doi.org/10.22495/cocv21i2art4