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Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy

Government linked companies (GLCs) play a unique role in the Malaysian public sector and are perceived to be the key drivers of the economy wielding influence in the financial market. This study investigates the impact of an important governance mechanism, i.e. the board of directors on performance...

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Main Authors: Sheikh Hassan, Ahmad Fahmi, Karbhari, Yusuf, Mohamad Isa, Ahmad Afendi, Ab Razak, Nazrul Hisyam
Format: Article
Language:English
Published: Virtus Interpress 2017
Online Access:http://psasir.upm.edu.my/id/eprint/60593/1/Board%20attributes%20and%20performance%20of%20government-linked%20companies%20%28GLCs%29%20evidence%20from%20an%20emerging%20economy.pdf
http://psasir.upm.edu.my/id/eprint/60593/
https://www.virtusinterpress.org/BOARD-ATTRIBUTES-AND-PERFORMANCE.html
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spelling my.upm.eprints.605932018-06-07T08:45:56Z http://psasir.upm.edu.my/id/eprint/60593/ Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy Sheikh Hassan, Ahmad Fahmi Karbhari, Yusuf Mohamad Isa, Ahmad Afendi Ab Razak, Nazrul Hisyam Government linked companies (GLCs) play a unique role in the Malaysian public sector and are perceived to be the key drivers of the economy wielding influence in the financial market. This study investigates the impact of an important governance mechanism, i.e. the board of directors on performance of 32 Malaysian listed GLCs for the period 2008 to 2013. The board attributes examined include board size, board structure, board independence, board competence, board meetings and directors’ equity ownership. The three proxies of financial performance employed are return on assets (ROA), return on equity (ROE) and earnings per share (EPS) with firm size and leverage being used as control variables. We find board size to have a positive but insignificant relationship with ROA whilst board structure, board independence and board competence indicate a positive relationship with ROE. Board competence also shows a positive relationship with EPS. However, board independence and directors equity ownership report a significant inverse relationship with ROA. A possible explanation is that independence and controlling stake of the board could not influence board strategy formulation and business decisions as government maintains full authority and final say on matters. Overall, the study contributes to the growing body of literature especially relating to Government linked companies. Virtus Interpress 2017 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/60593/1/Board%20attributes%20and%20performance%20of%20government-linked%20companies%20%28GLCs%29%20evidence%20from%20an%20emerging%20economy.pdf Sheikh Hassan, Ahmad Fahmi and Karbhari, Yusuf and Mohamad Isa, Ahmad Afendi and Ab Razak, Nazrul Hisyam (2017) Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy. Corporate Ownership & Control, 14 (3). pp. 74-83. ISSN 1727-9232; ESSN: 1810-3057 https://www.virtusinterpress.org/BOARD-ATTRIBUTES-AND-PERFORMANCE.html 10.22495/cocv14i3art8
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 Government linked companies (GLCs) play a unique role in the Malaysian public sector and are perceived to be the key drivers of the economy wielding influence in the financial market. This study investigates the impact of an important governance mechanism, i.e. the board of directors on performance of 32 Malaysian listed GLCs for the period 2008 to 2013. The board attributes examined include board size, board structure, board independence, board competence, board meetings and directors’ equity ownership. The three proxies of financial performance employed are return on assets (ROA), return on equity (ROE) and earnings per share (EPS) with firm size and leverage being used as control variables. We find board size to have a positive but insignificant relationship with ROA whilst board structure, board independence and board competence indicate a positive relationship with ROE. Board competence also shows a positive relationship with EPS. However, board independence and directors equity ownership report a significant inverse relationship with ROA. A possible explanation is that independence and controlling stake of the board could not influence board strategy formulation and business decisions as government maintains full authority and final say on matters. Overall, the study contributes to the growing body of literature especially relating to Government linked companies.
format Article
author Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
Mohamad Isa, Ahmad Afendi
Ab Razak, Nazrul Hisyam
spellingShingle Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
Mohamad Isa, Ahmad Afendi
Ab Razak, Nazrul Hisyam
Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
author_facet Sheikh Hassan, Ahmad Fahmi
Karbhari, Yusuf
Mohamad Isa, Ahmad Afendi
Ab Razak, Nazrul Hisyam
author_sort Sheikh Hassan, Ahmad Fahmi
title Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
title_short Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
title_full Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
title_fullStr Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
title_full_unstemmed Board attributes and performance of government-linked companies (GLCs): evidence from an emerging economy
title_sort board attributes and performance of government-linked companies (glcs): evidence from an emerging economy
publisher Virtus Interpress
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/60593/1/Board%20attributes%20and%20performance%20of%20government-linked%20companies%20%28GLCs%29%20evidence%20from%20an%20emerging%20economy.pdf
http://psasir.upm.edu.my/id/eprint/60593/
https://www.virtusinterpress.org/BOARD-ATTRIBUTES-AND-PERFORMANCE.html
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score 13.211869

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