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Determinants Of Board Size And Composition: A Comparative Study Of Nigerian And Malaysian Quoted Companies

Author

Listed:
  • O. J. Ilaboya

    (University of Benin, Edo State, Nigeria)

  • G. Ohiokha

    (Federal Polytechnic, Edo State, Nigeria)

  • M. O. Izevbekhai

    (Federal Polytechnic, Edo State, Nigeria)

Abstract

The broad objective of the study is to examine the determinants of board size and composition in Nigerian and Malaysian quoted banks.The population of the study is the universe of banks quoted on the Nigerian and Malaysian Stock Exchanges as at 31st December 2014. A sample of fourteen (14) banks for Nigeria and a sample of eighteen (18) banks for Malaysia were purposively selected for the study. The study employed panel regression technique based on the quality of unbiasedness, increased data point, and control for individual heterogeneity. To test the accuracy of the model, we employed the classical regression assumption tests of normality, heteroskedasticity, serial correlation and multicollinearity. The study revealed a significant relationship between firm size and board size and composition.The impact of firm size on board size was positive in the case of Nigeria but negative in the Malaysian case. The impact on board composition is positive in the case of Malaysia but negative in the Nigerian case. The relationship between free cash flow and board size was negative but significant only in the Malaysian case. The impact of free cash flow on board composition was positive and significant only in the Nigerian case. The mixed result between firm size and board size and composition calls for moderately sized firms. The increased free cash flow increases the potentials for private benefit and calls for increased ratio of external to internal board members for more effective monitoring.

Suggested Citation

  • O. J. Ilaboya & G. Ohiokha & M. O. Izevbekhai, 2016. "Determinants Of Board Size And Composition: A Comparative Study Of Nigerian And Malaysian Quoted Companies," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 25(2), pages 423-444, december.
    • Handle: RePEc:avo:emipdu:v:25:y:2016:i:2:p:423-444
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    More about this item

    Keywords

    Board composition; board size; free cash flows; firm age; firm size;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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