Multiple Directorships and the Monitoring Role of the Board of Directors: Evidence From Malaysia

Hasnah Kamardin, Rohaida Abdul Latif, Kamarun Nisham Taufil Mohd, Noriah Che Adam

Abstract


ABSTRACT

This study aims to examine the relationship between multiple directorships and the monitoring role of the board of directors in Malaysian listed companies (PLC). The monitoring role is proxied by the percentage of directors’ attendance in board meetings, as attending meetings provides directors with resources about the management actions and assists directors to exercise their role effectively. The study uses a sample of 1023 directors from 134 companies on the Main Market of Bursa Malaysia (Malaysian Bourse) in year 2008. The results of the study show that the incidence of multiple directorships is low. Independent directors are found to have more multiple directorships. Directors with multiple directorships are older directors, have less director ownerships and are on boards with a high fraction of independent directors. Based on the 75% cut-off for the percentage of meetings’ attendance, the logistic regression suggests that no agency cost is associated with multiple directorships. However, the tendency to be absent from board meetings is associated with the high number of board meetings whilst the tendency to attend more board meetings is associated with the increase in age, tenure, and director ownership.

Keywords: Corporate governance; multiple directorships; board meetings attendance; director ownership; tenure; firm performance; Malaysia

ABSTRAK

Kajian ini bertujuan untuk mengkaji hubungan di antara pelbagai jawatan pengarah dan peranan pemantauan oleh lembaga pengarah dalam syarikat-syarikat tersenarai Malaysia (PLC). Peranan pemantauan adalah diproksikan kepada peratusan kehadiran Pengarah dalam mesyuarat lembaga yang mana menghadiri mesyuarat menyediakan mereka dengan sumber-sumber mengenai tindakan pihak pengurusan dan membantu mereka menjalankan peranan dengan berkesan. Kajian ini menggunakan sampel 1023 pengarah daripada 134 syarikat di Pasaran Utama Bursa Malaysia (Bursa Malaysia) pada tahun 2008. Hasil kajian menunjukkan bahawa kewujudan pelbagai jawatan pengarah adalah rendah. Pengarah bebas didapati mempunyai lebih banyak pelbagai jawatan pengarah. Pengarah dengan pelbagai jawatan pengarah adalah terdiri daripada pengarah yang berumur, mempunyai kurang pemilikan pengarah dan berada di lembaga pengarah yang mempunyai pecahan pengarah bebas yang tinggi. Berdasarkan 75% peratusan kehadiran mesyuarat, regresi logistik menunjukkan tiada kos agensi yang berkaitan dengan pelbagai pengarah. Walau bagaimanapun, kecenderungan untuk ponteng mesyuarat lembaga dikaitkan dengan bilangan tinggi mesyuarat lembaga manakala kecenderungan untuk menghadiri mesyuarat Lembaga Pengarah lebih dikaitkan dengan peningkatan umur, tempoh perkhidmatan, dan pemilikan pengarah.

Kata kunci: Tadbir urus korporat; pelbagai jawatan pengarah; kehadiran mesyuarat lembaga; pemilikan pengarah; tempoh perkhidmatan; prestasi firma; Malaysia


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