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Influence of board of directors' and board's subcommittees atrributes on performance: An empirical evaluation of companies listed in KLSE

Mohd Saat, Nur Ashikin 2008. Influence of board of directors' and board's subcommittees atrributes on performance: An empirical evaluation of companies listed in KLSE. PhD Thesis, Cardiff University.

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Abstract

The purpose of this thesis was to examine the impact of the adoption of the Malaysian Code of Corporate Governance 2001 and Kuala Lumpur Stock Exchange (presently known as Malaysia Bourse) Listing Rulings 2001 by 221 listed Main and Second Board firms of the Bourse on their firm performance. To fulfil this objective, the study hypothesised the relationship between the firms' board of directors' and its sub-committees' (i.e. audit committee, nomination committee and remuneration committee) composition, structure and competency on firm performance. The study findings indicated that the presence of an independent director with corporate governance experience (i.e. a senior independent director) on the board of directors and its subcommittees had a positive impact on firm performance. Specifically, when domineering executive directors and family-member director(s) were present on the board and its subcommittees, the appointment of senior independent director safeguarded and strengthened the quality of independence, credibility, and influence of independent directors' views and decisions. Moreover, the board of directors that was led by an independent director, non-executive director or founder, and that had a separate chairman and CEO position established appropriate control and monitoring of authorization of power on the organisational process and board members conducts. Further, the presence of a high proportion of independent directors on the board and its sub committees was important to monitor family-member director and CEO, CFO and/or managing director influence on the board's and its sub-committees decisions. The study also found, the appointment of an independent financial expert, namely someone with practising accountant experience on the audit committee to be crucial given that some companies had the tendency to appoint the CEO, CFO, managing director and/or family-member director with a financial background to fulfil the position. In addition, directors with industry knowledge and experience were substantial in enhancing board entrepreneurship skills, strategic investment planning and improving the overall decision making process. The study further revealed that foreign directors and institutional investors that were active in monitoring of firm activities vital for shareholder value creation. The findings of the thesis make several important contributions to the corporate governance literature in identifying the impact of family-member directors' membership of audit, nomination and remuneration committees on such committees' effectiveness. Further, the empirical evidence gathered will assist the policy-makers in evaluating and improving current corporate governance ruling for better protection of investors' interests and greater commitment of corporations to practise responsible corporate governance conduct.

Item Type: Thesis (PhD)
Status: Unpublished
Schools: Business (Including Economics)
Subjects: H Social Sciences > HD Industries. Land use. Labor
ISBN: 9781303183058
Funders: University Putra Malaysia
Date of First Compliant Deposit: 30 March 2016
Last Modified: 12 Feb 2016 23:14
URI: http://orca-mwe.cf.ac.uk/id/eprint/55735

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