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INDEPENDENT DIRECTOR’S CHARACTERISTICS AND THE FIRMS’ PERFORMANCE


Independent director has been viewed as one of the mechanisms that can help improve corporate governance system within an organization. The Malaysian Code on Corporate Governance (2012) and Bursa Malaysia Listing Requirements have specifically focusing on the importance for all companies to have appropriate number of independent directors on boards. The study seeks to determine the level of firms’ performance among Malaysian public listed companies with high number of independent director on board and to investigate the relationship between the characteristics of independent director (gender, age, educational level and attendance to board meeting) and firms’ performance, which is measured by return on asset (ROA).A sample of 200 companies from the total population of 812 public listed companies in the main market of Bursa Malaysia are selected according to the criteria set which are the companies with financial year end 31st December 2015 and have high number of independent directors on board. The data of this study is asses from annual reports of selected public companies which are obtained from the Bursa’s website. Mean and standard deviation, correlation analysis and multiple regression analysis are used to analysis the data collected. The findings of this study indicated that the level of firm performance among Malaysian public listed companies with high number of independent directors on board is at a low level. This result implies that having a high number of independent directors on board did not guarantee to improve the firms’ performance. Next, the finding of this study indicated that the characteristics of independent director such as gender, age and educational level of independent directors have no relationships with the firms’ performance. In contrast, attendance to board meeting appeared to be negatively and significant related with the firm performance. These result suggested that independent directors in Malaysian publicly listed companies make no or little contribution during board meeting resulted with no significant impact on firm performance. The results of this study may help the policy makers namely the government and Bursa Malaysia to develop a better policy in relation to the independent directors’ characteristics. Finally, in terms of practical standpoint, the nomination committee or company secretary should advice the board of directors in relation to the selection of a suitable person to be appointed and nominated as the independent directors to the board of companies.

  • SITI NORAIESYAH BINTI SAMSUDIN
  • December 2016
  • Master of Corporate Administration (MOCA)/GRAD ICSA
  • Shah Alam, Selangor
  • BILIK THESIS FSPPP
  • 21
  • Completed
Supervisor

List of Supervisor

PROF MADYA DR NORZIANA BINTI LOKMAN

Senior Lecturer

Dr. Norziana Lokman is a senior lecturer at Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA Shah Alam Selangor.

norzianadr norzianadr ziana
  • FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES
  • 603-5543 5867
  • PhD in Corporate Administration/Corporate Governance

DR SARINA BINTI OTHMAN

Senior Lecturer

Sarina Othman is a senior lecturer at the Faculty of Administrative Science & Policy Studies, UiTM Shah Alam, Malaysia. She has been teaching in the area of Corporate Governance, Company Secretarial Practice, Organizational Behaviour and a few other Management subjects for almost 11 years.

  • Shah Alam, Selangor
  • +03-55435887
  • MSc Corporate Governance in Corporate Governance
About

DiTIS is a short form of FSPPP’s Dissertations and Theses Inventory System. Since the establishment of FSPPP, the faculty has produced volumes of post-graduate and undergraduate dissertations and/or theses. Therefore, there is a dire need to establish a database to manage these high volumes of dissertations and theses.

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