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Internal corporate governance and board performance in monitoring roles

Author

Listed:
  • Hasnah Kamardin
  • Hasnah Haron

Abstract

Purpose - This paper aims to examine the relationship between internal corporate governance mechanisms and board performance in monitoring roles. Design/methodology/approach - A survey questionnaire was used to gather data on board performance, while annual reports were employed to gather data on internal corporate governance mechanisms. Data for board performance were based on 112 directors who represent the companies. Findings - Factor analysis extracted two dimensions of monitoring roles: management oversight roles and performance evaluation roles. Non‐independent non‐executive directors and managerial ownership were found to be positively related to both dimensions of monitoring roles, while the multiple directorships of non‐executive directors were negatively related to management oversight roles. Practical implications - The paper establishes the need for regulators to pay particular attention to multiple directorships, which are commonly practiced in public listed companies. The contribution of non‐independent non‐executive directors rather than independent directors in monitoring roles calls for further research. Regulators need to emphasize the performance evaluation roles of the board of directors (BOD), as much emphasis has been given to management oversight roles. Originality/value - The study contributes to the literature concerning monitoring roles as it shows that management oversight roles and performance evaluation roles are differentiated. The findings provide an avenue for the contribution of non‐independent non‐executive directors and multiple directorships in monitoring roles.

Suggested Citation

  • Hasnah Kamardin & Hasnah Haron, 2011. "Internal corporate governance and board performance in monitoring roles," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 9(2), pages 119-140, October.
  • Handle: RePEc:eme:jfrapp:v:9:y:2011:i:2:p:119-140
    DOI: 10.1108/19852511111173095
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    Citations

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    Cited by:

    1. Shivan Sarpal, 2015. "Determinants of Corporate Board Independence: Empirical Evidence from India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 40(1-2), pages 52-74, February.
    2. Rahayati Ahmad & Roshima Said & Syahiza Arsad, 2017. "The Board Governance Mechanism and the Effect of Concentration Ownership on Malaysia Companies Performance," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(2), pages 757-768, February.
    3. Apu Manna & Tarak Nath Sahu & Krishna Dayal Pandey, 2020. "Board size, multiple directorship and performance of Indian listed firms," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 19(2), pages 111-129.
    4. Yinka M. Salaudeen & Taibat A. Atoyebi & Bamidele A. Oyegbile, 2018. "Enterprise Risk Management and Performance of Selected Listed Consumer Goods Companies in Nigeria," Applied Finance and Accounting, Redfame publishing, vol. 4(1), pages 112-121, February.
    5. Ayad Ahmed Mohammed Al-Qublani & Hasnah Kamardin & Rohami Shafie, 2020. "Audit Committee Chair Attributes and Audit Report Lag in an Emerging Market," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 475-492, July.

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