UPM Institutional Repository

The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies


Citation

Saidin, Norhaniza and Malik @ Malek, Mazrah and Saidin, Saidatunur Fauzi (2013) The impact of interlocking directorates on corporate performance of Bursa Malaysia listed companies. Pertanika Journal of Social Sciences & Humanities, 21 (spec. Oct.). pp. 111-126. ISSN 0128-7702; ESSN: 2231-8534

Abstract

One of the main concerns about interlocking directorates is their effect on corporate performance; however, there is little research undertaken on this issue. Therefore, the objective of this study is to examine the effect of interlocking directorates on corporate performance by considering the nature and the direction of interlocking. The analyses are based on the data of 741 listed companies on Bursa Malaysia in 2007. The Ordinary Least Square regression results show that the number of interlocking companies, inter-industry interlocking directorates and interlocking created by independent directors are all significant and positively related to corporate performance, which is consistent with the resource dependence theory and the corporate governance theory. However, it is also discovered that both multiple directorships by executive directors and non-executive non-independent directors do not have any effect on corporate performance, which is consistent with the class integration theory. Despite the negative perception on interlocking directorates by the public, the findings suggest that interlocking directorates actually benefit shareholders by enhancing the earnings performance of the corporation.


Download File

[img]
Preview
PDF
28363.pdf

Download (424kB) | Preview

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Universiti Putra Malaysia Press
Keywords: Corporate performance; Directors; Interlocking directorate
Depositing User: Nabilah Mustapa
Date Deposited: 29 Apr 2015 05:21
Last Modified: 21 Sep 2015 02:55
URI: http://psasir.upm.edu.my/id/eprint/28363
Statistic Details: View Download Statistic

Actions (login required)

View Item View Item