Unveiling the Link between Corporate Board Attributes, Board Behavior, and Financial Leverage: Insights from Malaysia

Hussain Tahir, Mahfuzur Rahman, Md. Abdul Kaium Masud () and Mohammed Mizanur Rahman
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Hussain Tahir: Department of Management Sciences, Muhammad Nawaz Sharif University of Engineering and Technology, Old Bahawalpur Road, Qasim Pur Colony Qasimpur Colony, Multan 60030, Pakistan
Mahfuzur Rahman: Department of Finance and Economics, College of Business Administration, University of Sharjah, Sharjah 27272, United Arab Emirates
Md. Abdul Kaium Masud: Department of Business Administration, Noakhali Science and Technology University, Noakhali 3814, Bangladesh
Mohammed Mizanur Rahman: Department of Accounting and Information Systems, Comilla University, Cumilla 3506, Bangladesh

JRFM, 2023, vol. 16, issue 4, 1-12

Abstract: The aim of this paper is to examine the characteristics and conduct of boards in non-financial Malaysian firms, with a particular emphasis on the companies’ financial leverage, using panel data spanning from 2012 to 2018. Overall, the study reveals that the relationship between board attributes and a firm’s financial leverage is significant, but mixed. Notably, we find that extremely small or large boards are ineffective in maintaining the optimal financial leverage level that benefits all stakeholders. Our study concludes that board independence is negatively correlated with financial leverage, whereas the tenure of board members is negatively associated with financial leverage. Additionally, board diversity exhibits a statistically significant and positive correlation with financial leverage. Currently, the Malaysian corporate governance code advocates announcing regulations to regulate corporate structures.

Keywords: board attributes; board behavior; financial leverage; board independence; board diversity (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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