Association between board structure and the value added efficiency of physical and intellectual resources of firms in Malaysia / Nurmala Mustaffa Kamal

This dissertation examines the association between board structure and corporate
performance, where performance is defined as the value added (VA) efficiency of the
firms' physical and intellectual resources rather than the more commonly used
financial terms or profitability ratios. It is argued that the inclusion of intellectual
elements into the measurement provides a long-term measurement of corporate
performance. The VA efficiency of the firms' total resources is calculated using the
Value Added Intellectual Coefficient (VAIC) methodology developed by Ante Pulic
(1998). The four board characteristics that are of interest in this study are board
composition, directors' ownership, CEO duality and board size. Based on a
randomly selected sample of 75 companies listed on the main board of Bursa
Malaysia, it is found that board composition and board size have a positive impact on
the VA efficiency of firms' total resources, while the effects of directors' ownership
and CEO duality on the VA efficiency of firms' total resources are not established.
The outcome of the study shows that the emphasis on the importance of independent
non-executive directors on the board by the Malaysian Code on Corporate
Governance and by the requirements of Bursa Malaysia is deemed very important to
the long-term performance of the companies. The study also shows that larger
boards function more effectively in Malaysia.