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The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies

One of the main concerns about interlocking directorates is their effect on corporate performance; however, there is little research undertaken on this issue. Therefore, the objective of this study is to examine the effect of interlocking directorates on corporate performance by considering the nat...

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Main Authors: Saidin, Norhaniza, Malik @ Malek, Mazrah, Saidin, Saidatunur Fauzi
Format: Article
Language:English
Published: Universiti Putra Malaysia Press 2013
Online Access:http://psasir.upm.edu.my/id/eprint/28363/1/28363.pdf
http://psasir.upm.edu.my/id/eprint/28363/
http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2021%20%28S%29%20Oct.%202013/08%20Page%20111-126.pdf
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spelling my.upm.eprints.283632015-09-21T02:55:01Z http://psasir.upm.edu.my/id/eprint/28363/ The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies Saidin, Norhaniza Malik @ Malek, Mazrah Saidin, Saidatunur Fauzi One of the main concerns about interlocking directorates is their effect on corporate performance; however, there is little research undertaken on this issue. Therefore, the objective of this study is to examine the effect of interlocking directorates on corporate performance by considering the nature and the direction of interlocking. The analyses are based on the data of 741 listed companies on Bursa Malaysia in 2007. The Ordinary Least Square regression results show that the number of interlocking companies, inter-industry interlocking directorates and interlocking created by independent directors are all significant and positively related to corporate performance, which is consistent with the resource dependence theory and the corporate governance theory. However, it is also discovered that both multiple directorships by executive directors and non-executive non-independent directors do not have any effect on corporate performance, which is consistent with the class integration theory. Despite the negative perception on interlocking directorates by the public, the findings suggest that interlocking directorates actually benefit shareholders by enhancing the earnings performance of the corporation. Universiti Putra Malaysia Press 2013-10 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/28363/1/28363.pdf Saidin, Norhaniza and Malik @ Malek, Mazrah and Saidin, Saidatunur Fauzi (2013) The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies. Pertanika Journal of Social Sciences & Humanities, 21 (spec. Oct.). pp. 111-126. ISSN 0128-7702; ESSN: 2231-8534 http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2021%20%28S%29%20Oct.%202013/08%20Page%20111-126.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description One of the main concerns about interlocking directorates is their effect on corporate performance; however, there is little research undertaken on this issue. Therefore, the objective of this study is to examine the effect of interlocking directorates on corporate performance by considering the nature and the direction of interlocking. The analyses are based on the data of 741 listed companies on Bursa Malaysia in 2007. The Ordinary Least Square regression results show that the number of interlocking companies, inter-industry interlocking directorates and interlocking created by independent directors are all significant and positively related to corporate performance, which is consistent with the resource dependence theory and the corporate governance theory. However, it is also discovered that both multiple directorships by executive directors and non-executive non-independent directors do not have any effect on corporate performance, which is consistent with the class integration theory. Despite the negative perception on interlocking directorates by the public, the findings suggest that interlocking directorates actually benefit shareholders by enhancing the earnings performance of the corporation.
format Article
author Saidin, Norhaniza
Malik @ Malek, Mazrah
Saidin, Saidatunur Fauzi
spellingShingle Saidin, Norhaniza
Malik @ Malek, Mazrah
Saidin, Saidatunur Fauzi
The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
author_facet Saidin, Norhaniza
Malik @ Malek, Mazrah
Saidin, Saidatunur Fauzi
author_sort Saidin, Norhaniza
title The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
title_short The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
title_full The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
title_fullStr The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
title_full_unstemmed The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies
title_sort impact of interlocking directorates on corporate performance of bursa malaysia listed companies
publisher Universiti Putra Malaysia Press
publishDate 2013
url http://psasir.upm.edu.my/id/eprint/28363/1/28363.pdf
http://psasir.upm.edu.my/id/eprint/28363/
http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2021%20%28S%29%20Oct.%202013/08%20Page%20111-126.pdf
_version_ 1643829442474147840
score 13.211869

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