Internal corporate governance and board performance in monitoring roles

Abstract

Purpose -This paper aims to examine the relationship between internal corporate governance mechanisms and board performance in monitoring roles. Design/methodology/approach -A survey questionnaire was used to gather data on board performance, while annual reports were employed to gather data on internal corporate governance mechanisms. Data for board performance were based on 112 directors who represent the companies. Findings -Factor analysis extracted two dimensions of monitoring roles: management oversight roles and performance evaluation roles. Non-independent non-executive directors and managerial ownership were found to be positively related to both dimensions of monitoring roles, while the multiple directorships of non-executive directors were negatively related to management oversight roles. Practical implications -The paper establishes the need for regulators to pay particular attention to multiple directorships, which are commonly practiced in public listed companies. The contribution of non-independent non-executive directors rather than independent directors in monitoring roles calls for further research. Regulators need to emphasize the performance evaluation roles of the board of directors (BOD), as much emphasis has been given to management oversight roles. Originality/value -The study contributes to the literature concerning monitoring roles as it shows that management oversight roles and performance evaluation roles are differentiated. The findings provide an avenue for the contribution of non-independent non-executive directors and multiple directorships in monitoring roles.

The Impact of Enterprise Risk Management on Firm Performance: Evidence from Malaysia

“…The independent variable was adopted 5-point Likert scale ranging from "1=strongly disagree" to "5=strongly agree". Firm complexity (measured by number of business segments, adopted from Gordon et al, (2009), BODs' monitoring (10 items) is adapted from Kamardin & Haron (2011) and firm size (measured by number of employees, adopted from Gordon et al, (2009), are the moderating variables in this study. 5-point Likert scale ranging from "1=strongly disagree" to "5=strongly agree" was utilized in measuring the moderating variables.…”

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

“…However, the findings from studies on the effectiveness of outside directors, particularly the effectiveness of the monitoring role of independent directors, are mostly found to be insignificant. Several studies have suggested that having excessive multiple directorships is one of the factors that leads to directors not producing a positive effect on firm performance (Haniffa & Hudaib 2006;Jackling & Johl 2009), management oversight role (Kamardin & Haron 2011a), or the strategic role performed by the directors (Kamardin & Haron 2011b).…”

Internal and External Audit Attributes, Audit Committee Characteristics, Ownership Concentration and Earnings Quality: Evidence from Malaysia

“…Second, we introduce new variables, namely audit committee chairman who is a senior or former audit partner in the audit firm. Third, following the previous studies (Porta, Lopez De Silanes & Shleifer, 1999;Fan & Wong, 2002;Yunos, Smith & Ismail, 2010;Kamardin & Haron, 2011;Abdullah & Nasir (2004); Abdul Rahman & Ali 2006) suggestions of the effect of ownership concentration on monitoring mechanisms, information asymmetry and its impact on earnings quality, we also examine ownership concentration (five largest shareholders) on earnings quality of companies listed on the Malaysian Main Market.…”