The Impact of Board Composition on Financial Performance of Commercial Banks in Malaysia
DOI:
https://doi.org/10.52962/ipjaf.2023.7.1.146Keywords:
Corporate governance, firm financial performance, Malaysian banking industry, board composition, board independence, board diversity, board sizeAbstract
Corporate governance encompasses the rules, policies, and practices guiding a company's operations. This study contributes to corporate governance knowledge by empirically analyzing the impact of board composition on bank financial performance within the Malaysian market. Key determinants, including board independence, board diversity, and board size, are examined in relation to bank performance measured by return on assets (ROA). The study also recognizes the moderating role of firm age, size, growth, and leverage in these relationships. Data of commercial banks listed on Bank Negara Malaysia is from 2016 to 2020 .The dataset, sourced from secondary materials, was extracted from banks' published annual reports and corporate governance reports. Descriptive statistics, multiple regression, and correlation analyses were conducted to assess the impact of these relationships. The research findings indicated that the proportion of independent directors, board diversity, board size, and bank financial performance metrics showed no significant relationships. Consequently, the study suggests that board composition has limited influence on the success of Malaysia's bank performance.
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