The influence of the chairman and CEO effectiveness on operating performance: Evidence from Malaysia

Abstract

This study investigates the relationship between the Chairman's characteristics (age, title, tenure, and ownership) and the firm's operating performance (measured by profitability and liquidity), and whether the Chief Executive Officer's (CEO) effectiveness (a combination of non-duality, age, and tenure) strengthens or impairs this relationship. Based on a total sample of 267 observations, we use Ordinary Least Squares (OLS) regression to investigate the hypotheses established for the top 89 non-financial firms listed on the Malaysian Main Market during 2017 to 2019. The findings show that Chairman age is positively and significantly associated with the firm's profitability but not with liquidity. Conversely, Chairman ownership is positively and significantly associated with liquidity but not with profitability. These findings suggest that the age and ownership of the Chairman may significantly boost operating performance. However, Chairman tenure is negatively and significantly associated with operating performance (profitability and liquidity), suggesting that long-tenured Chairmen are associated with poor ABOUT THE AUTHOR

Do the characteristics of the board chairman have an effect on corporate performance? Empirical evidence from Saudi Arabia

“…That is, a Chairman with shorter tenure appears to be more dynamic and challenging in displaying stewardship to achieve positive performance. This result is consistent with Chandren et al. (2021) findings on the association between BC tenure and operating performance and Waelchli and Zeller (2013) findings on the association between BC tenure and CP.…”

“…Researchers have widely investigated the association of the characteristics of the board directors (at board of director’s level) with CP (e.g., Ali and Oudat, 2021 ; Bawazir et al., 2021 ; Brahma et al., 2021 ; Coles et al., 2008 ; Culasso et al., 2012 ; Daunfeldt and Rudholm, 2012 ; Kanakriyah, 2021 ; Livnat et al., 2021 ; Misra, 2020 ; Olsen and Cox, 2001 ; Vieira, 2018 ; Ujunwa, 2012 ) and earnings management (e.g., Alves, 2011 ; Chaiwut et al., 2020 ; Coles et al., 2008 ; Jaggi and Leung, 2007 ; Kao and Chen, 2004 ). However, little attention has been devoted to investigate this association at the individual level (BC), particularly the association with corporate performance ( Amran et al., 2014 ; Chandren et al., 2021 ).…”

“…Moreover, few previous studies investigated some of BC characteristics such as age ( Amran et al., 2014 ; Chandren et al., 2021 ; Waelchli and Zeller, 2013 ), gender ( Amran et al., 2014 ; Xiong, 2016 ), tenure ( Chandren et al., 2021 ; Waelchli and Zeller, 2013 ; Xiong, 2016 ) and expertise ( Amran et al., 2014 ; Xiong, 2016 ). However, there is a paucity of research, if any, that none of the studies has examined the effect of BC multiple directorship, particularly on corporate performance and this relationship has not been given the deserved attention.…”

Audit Committee Leadership Attributes and CSR Reporting: Evidence from Jordan

“…The second set is related to the firm's characteristics included: audit firm size (BIG4) is computed as a dummy variable taking a value of ''1'' for firms with a BIG4 auditor and ''0'' otherwise (Ghaleb, Al-Duais, & Hashed, 2021). Finally, firm size (FSIZE) is computed by the natural logarithm of a firm's total assets; firm leverage (LEVE) is calculated by the ratio of total liabilities to firm size and market to book value ratio (MTBV) (Chandren et al, 2021;Gal & Akisik, 2020;Ting, 2021). These variables included in our regression model because firms' CSR investment could be impacted by financial conditions and resource availability.…”

“…ACCEDU is measured alternatively as a continuous variable: secondary school or below = 1, diploma = 2, bachelor’s degree = 3, master’s degree = 4, and doctorate = 5 (Katmon et al, 2019; Khan, Khan, & Senturk, 2019). The natural logarithm of ACC age alternatively measures ACCAGE (Chandren et al, 2021). The results presented in Table 5 (Models 2 and 3) reveal that the findings remain consistent with our preliminary results, thus confirming the model’s robustness.…”