IS AGENCY THEORY DOMINANT IN EXPLAINING THE BOARD ROLES OF MALAYSIAN LISTED FIRMS?

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Zuaini Ishak, Nor Aziah Abd Manaf, Shamsul Nahar Abdullah

DOI:10.22495/cocv13i3c3p12

Abstract

This study examines the experiences of board members regarding their roles, the conduct of board meetings, and their influence on the appointment of new directors, the influence of “major” shareholders on board decisions, and the protection of the interest of the minority shareholders. The main objective of this study is to determine whether agency theory plays a dominant role in explaining the roles of the directors of Malaysian listed firms. Semi-structured interviews were carried out amongst selected directors. Our results suggest that agency theory alone is not sufficient to explain the complex issues involving board roles. Rather, a clearer picture emerges with the integration of agency theory and wider theoretical perspectives (i.e. stewardship and resource dependency). Although there is a constrain in accessing the board, this should not hamper future studies on examining other issues that could affect board roles such as effectiveness of the chairman, non-executive directors and board sub-committees. Studies of this nature are important as the board has an important influence on the decision making process.

Keywords: Board Roles, Board Process, Agency Theory, Stewardship Theory, Resource Dependence Theory, Malaysia

How to cite this paper: Ishak, Z., Abd Manaf, N. A., & Abdullah, S. N. (2016). Is agency theory dominant in explaining the board roles of Malaysian listed firms? Corporate Ownership & Control, 13(3-3), 533-542. http://doi.org/10.22495/cocv13i3c3p12