Factors That Determine Independent Director's Existence on the Board of Directors: Evidence from Malaysian Listed Companies

• Main Author: Abdi, Mubarik Mohamed
• Format: Thesis
• Language: English; English
• Published: 2014
• Subjects: HF5601-5689 Accounting
• Online Access: https://etd.uum.edu.my/4039/1/s812371.pdf; https://etd.uum.edu.my/4039/2/s812371_abstract.pdf; https://etd.uum.edu.my/4039/
• Institution: Universiti Utara Malaysia

The purpose of this paper is to study the determinants of the presence of independent directors on boards of directors. Based on the agency theory, we study the different factors influencing the nomination of independent directors. The tests were applied to a sample of 71 companies belonging to Bursa Malaysia Main Market from 2007 to 2009. Using an OLS data regression framework, the findings show that the, coalition control, leverage and CEO tenure determine the independence of the board from the management. The result indicated that when the part of capital represented on the board and held by the coalition of control is low, the presence of independent directors is more important. The presence of the independent directors is significantly and positively determined by the level of debt and CEO tenure. However, we do not find evidence of the influence of the ownership structure, Company size and CEO Duality.