Board Mechanisms and Firm's Financial Performance: Evidence from Malaysian GLCs

This study examines the relationships of board mechanism as part of corporate governance and financial performance of selected Malaysian Government-Linked Companies (GLCs). The elements of board mechanisms as emphasized in the Green Book such as board size (BSiz), board independent (BInd), multiple directorships (MDir), senior government officer (SGO) and board meeting frequency (BMF) are examined. Whereas earnings per share (EPS) is used as the proxy to reflect the firm's financial performance as a dependent variable. The study used secondary data to utilize the annual report of 23 GLCs in Malaysia for five years period of observation from 2011 until 2015 as a sample. A descriptive statistic analysis, correlation test, and regression test were employed in the analysis to examine the relationship between dependent and independent variables. This study revealed that there is a positive relationship between the proportion of BInd with firm's financial performance whereas four variables namely BSiz, MDir, SGO and BMF is found to have a negative relationship with firm's financial performance. It is expected that these findings able to contribute to the literature, particularly relating to GLCs in Malaysia. Apart from that, several limitations and recommendations for future research also discussed.