In particular, I would like to thank my supervisor, Dr. Lee Hui Shan, for her continued guidance and advice throughout this research. This study examines the relationship between different corporate governance practices and boardroom diversity and the performance of companies in the top 98 listed companies in 5 ASEAN countries. The sample size of this study is based on ACGS 2019 winners from the 5 ASEAN countries.
Overall, the research found that the measurement variables have no significant impact on firm performance. It suggests future researchers to explore other factors as well as different measurements that may affect firm performance.
- Introduction
- Research Background
- Problem Statement
- Research Objectives
- Research Questions
- Significance of study
- Conclusion
According to Khan, Nosheen and ul Haq (2020), good corporate governance practices came to light after the financial crisis of 1997, which promoted its development. The following questions are raised after identifying the research objectives: Does the Corporate Governance mechanism and board diversity (CEO duality, board size, percentage of women on the board, percentage of independent directors on the board, number and presence of central company committees and board meeting attendance) affect company performance . Various researchers had commented on the good practice of long-term corporate governance and its impact on the business.
Therefore, with the introduction of more regulations and guidelines for good corporate governance practices in ASEAN, it is important for us to investigate and monitor whether these measures have a positive impact on the companies. However, efforts have been made by policy makers to regulate and tighten corporate governance practices of companies to ensure transparency and disclosure to various stakeholders with the adoption of various CG good practice codes by the respective countries.
- Introduction
- Firm Performance
- Relevant Theoretical Model and Hypothses Development
- Agency Theory
- Stewardship Theory
- Resource Dependence Theory (RDT)
- Conceptual Framework
- Conclusion
It appears to be a metric to assess the performance of a company from an investment perspective, if the company's investment is effective. On the other hand, Gul, Srinidhi, and Ng (2016) suggested that the percentage of women on the board of directors also significantly affects Tobin's ratio Q. Then, this study will show how other independent variables affect firm performance on average ROA and Tobin's ratio Q.
In the board of directors, only 2 directors had (subsidiary) experience from the financial industry. However, over time the trend of family members being on the board and top executive team is decreasing. This guideline appears to be similarly mentioned in the CG Code for ASEAN Country 5 Research.
MCCG 2021 requires large companies to disclose their policy on the appointment of women to the board and appointments are expected to have at least 30% of women on the board. Dang and Nguyen (2016) and Luckerath-Rovers (2013) suggested that female representation in the boardroom may offer a different, dynamic perspective at different points of the boardroom discussions that will subsequently have a positive impact on firm performance. Trend towards a more balanced gender composition in the board is inevitable, followed by many corporate scandals and failures in recent years.
Therefore, it is predicted that the future trend will shift to the separation of roles (Boyd, 1995). Having this, it is claimed that the role of duality would have a negative impact on financial performance in the long term, as Board members refrain from removing non-performing CEOs (Saltaji, 2013). Referring to the members on the board, with a larger board, it is expected that the controlling and monitoring activities of the board will be greatly affected.
Including CEO duality, board size, percentage of women on the board, percentage of independent directors on the board, number and presence of key corporate committees, and board meeting attendance as independent variables; ROA and Tobin's Q ratio as the dependent variables. Percentage of women on the board of directors Percentage of independent directors on the board of directors Number and presence of key corporate committees Attendance at board meetings.
- Introduction
- Research design
- Data Collection Method
- Target Population & Sampling Element
- Research Instrument
- Construct Instrument
- Data Analysis- Descriptive Analysis , Correlation Matrix, Panel data analysis
- Descriptive Analysis
- Pearson Correlation Analysis
- Panel Data Analysis
- Conclusion
Supporting data and information can also be obtained from various articles published through various portals such as Google Scholar and E-library provided by the university and annual reports can be downloaded from the State Stock Exchange website. The 134 Good Disclosure Practices winners are available on the ASEAN Capital Markets Forum (ACMF) website. The said list is available on the ACMF website: https://www.theacmf.org/initiatives/corporate-governance/2019-asean-corporate-governance-scorecard-acgs-awards.
The implication of these winners would indicate that these companies can be considered as the role model of the other companies as these companies have been rated and assessed by the ACMF. One of the main objectives of the establishment of ACMF is to raise CG standards and practices of ASEAN PLC. The ACGS appears that the joint initiative between ACMF and Asian Development Bank (ADB) and the PLC of the ASEAN countries has been assessed based on publicly available information and tested against best practice around the world.
Therefore, the research is conducted with a sample size of 134 companies that have been recognized as the best in CG performance in ASEAN. As such, the table below is the final target sample on which the survey is conducted. The required data is mostly obtained from the Bloomberg database and the annual reports of the target sample companies.
In the current digitized environment, the required annual reports can be easily downloaded from the company's official website on the investor relations page or accessed from the main website of each country's stock exchange. The results are observed through analysis and used as a representation of the target population. Data and information are collected and accumulated by the mentioned techniques and in the next chapter they will be further tested to identify the correlation of different variables.
- Introduction
- Descriptive Analysis
- Correlation Matrix
- Panel data analysis
From the descriptive analysis of the percentage of women serving on the board of administration, it is observed that the numbers have gradually increased from year to year. The percentage of independent directors has a mean of 53.3210%, indicating that most companies had their board of directors composed of a majority of independent directors. This corresponds to the idea of the ASEAN 5 CG Code of Good Practice, where independent directors are vital to a company's success. The highest correlation coefficient will be between the number and presence of key committee members and the percentage of independent directors (r p <0.001).
From the table, we can also indicate that Tobin's Q-ratio is only positively related to the percentage of women on the board and board meetings. Based on the table, we will first examine whether ROA has a significant impact on the company's performance. First, based on the ordinary least squares (OLS), the percentage of women on the board and meeting attendance have a positive relationship with ROA, where others are negatively related. to ROA. The table also illustrates that CEO Duality and the percentage of independent director are insignificant with ROA, with p-value of >0.05.
The column also highlighted the percentage of women, board size and number and presence of key corporate committees is statistically significant. Percentage of women on the board and percentage of independent directors indicate an inverse relationship with ROA. From the observation, only percentage of independent directors is significant with the p-value of <0.05.
The table also shows that CEO duality and independent director percentage, board size and meeting attendance rate are insignificant with Tobin's Q ratio, with a p-value >0.05. The overall results show that CEO duality, board size, and the number and presence of key corporate boards are positively related to Tobin's ratio Q. From the observation, only the percentage of women on the board is significant with a p-value <0.05.
- Introduction
- Discussion of the findings
- Agency Theory in relation to percentage of independent directors ; number and presence of
- Stakeholder theory in relation to percentage of women in the board
- Stewareship theory in relation to Board meeting attendance and CEO duality
- Resource Dependence Theory (RDT) in relation to Board Size
- Implication of study
- Recommendations for future study
- Conclusion
Contrary to Lam and Lee (2012); Christensen et al Green and Homroy (2017), The panel data analysis finds that the number and presence of key corporate committees is negative and significant for firm performance in both ROA and Tobin's Q ratio. Inconsistent with the study of Lenard et al., (2014) and Campbell and Vera (2007), where gender diversity would have a positive impact on firm performance. Nevertheless, this may imply that gender diversity in the board may not be a key indicator in firm performance in terms of ROA and Tobin's Q ratio for the companies from the sample size.
As suggested by Salem et al., (2019), the board of directors acting as the steward of the company appointed by the principals and attending board meetings will have a better effect in monitoring the company and the firm performance to increase. Chou et al.,(2013); Gray and Nowland (2018) highlighted that board meeting attendance tends to have a positive relationship with firm performance in terms of ROA. There is a negative relationship with firm performance, suggesting that by practicing CEO duality, it will have a negative impact on firm performance.
For example, what can be done to improve current corporate governance practices that might lead to increased company performance. The evidence from this study also suggests that some of the policies introduced in the code of good corporate governance could bring positive value to firm performance. The purpose of the study is to examine the significance of the CG mechanism and practices of leading ASEAN listed companies and their impact on corporate performance.
Most of the independent variables tested were not found to be significant for company performance in this study. The duality of CEOs and board meeting attendance does not appear to be statistically significant for company performance from the panel data analysis. Similarly, in the correlation matrix analysis, these two variables show no significance in relation to business performance.
Board outsiders and corporate performance: Evidence from Spanish, privately held family firms. The relationship between board size, board composition, CEO duality and firm performance: experience from Ghana.
