The Effect of Board Composition on the Efficiency of Public Listed Companies in Malaysia

Chee-Keong Choong, Sok-Gee Chan and Chuen-khee Pek ()
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Chuen-khee Pek: The University of Nottingham Malaysia Campus

Economics Bulletin, 2016, vol. 36, issue 3, 1354-1363

Abstract: Using data from 2005 to 2010, we investigate the effects of board composition, especially by qualification of directors and role of independent directors, on the efficiency for Malaysia in balanced panel consisting of top 100 public listed companies and 582 observations. Using Data Envelopment Analysis (DEA), we calculate technical efficiency by taking into account of both time and firm effects directly. We conclude that the top 100 public listed companies are relatively less efficient in utilizing their inputs in terms of labor and capital in achieving a given level of output which is measured by the amount of sales revenues. In Tobit regressions, we investigate effect of board compositions on the firm's efficiency level for both cost and profit. With respect to the effect of board compositions, we find that number of independent directors is positively and statistically significant to increase firm efficiency while board size does not significantly influence the firms' performance.

Keywords: Global financial crisis; bank efficiency; firms' performance; board size and board structure (search for similar items in EconPapers)
JEL-codes: G2 G3 (search for similar items in EconPapers)
Date: 2016-07-08
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Citations: View citations in EconPapers (1)

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