Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid

Separation of ownership and control in large publicly owned firms has induced potential conflicts between the interests of managers and shareholders (Berle and Means, 1932). This is due to inconsistency between managers and shareholder's goals. This divergence of managers' and sharehold...

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Main Author:	Abd Hamid, Nadiah
Format:	Thesis
Language:	English
Published:	2001
Subjects:	Leadership Transformational leadership
Online Access:	https://ir.uitm.edu.my/id/eprint/2392/1/TM_NADIAH%20ABD%20HAMID%20AC%2001_5%201.pdf
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id	my-uitm-ir.2392
record_format	uketd_dc
spelling	my-uitm-ir.23922016-07-05T01:58:14Z Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid 2001 Abd Hamid, Nadiah Leadership. Transformational leadership Separation of ownership and control in large publicly owned firms has induced potential conflicts between the interests of managers and shareholders (Berle and Means, 1932). This is due to inconsistency between managers and shareholder's goals. This divergence of managers' and shareholders* objective may lead to acute conflict of interest in decisions making regarding the strategic orientation of the firm. Therefore, one key purpose of the board is to reduce the negative potential of the agency problem through monitoring, representation and oversight responsibilities. Thus, the current study aims to contribute in determining board characteristics of acquiring firms, which may response to the agency problem. The current study examines the difference on board characteristics between acquiring and non-acquiring firms and the associations between these characteristics and Chief Executive Officer (CEO) ownership. Three characteristics of board of directors are examined: board size, proportion of outside directors and dual leadership (separation of the CEO and Chairman's roles). Based on a sample of 62 acquiring and 62 non-acquiring firms (as control companies) in Malaysia over a period of 1999-2000, the study finds that only board size is significantly difference between acquiring and non-acquiring firms. In addition, the proportion of outside directors is negatively associated with the company type. This indicates that less number of outside directors on the board when the company acquires target company. Furthermore, the study reveals that board size and outside directors is negatively correlated with the percentage of shares owned by CEO. Finally, the study shows that CEO ownership is affected if the number of independent non-executive director more than non-executive director. These findings suggest that acquiring firms with larger percentage of shares owned by CEO and small number of board members and also small number of outside directors represented on the board would lead to greater agency problems. Therefore, in order to mitigate these problems the number of independent nonexecutive directors representing on the board should be increased at least to one third of the total members of directors on the board as suggested by Malaysian Code on Corporate Governance (MCCG). 2001 Thesis https://ir.uitm.edu.my/id/eprint/2392/ https://ir.uitm.edu.my/id/eprint/2392/1/TM_NADIAH%20ABD%20HAMID%20AC%2001_5%201.pdf text en public masters Universiti Teknologi MARA Faculty of Accountancy
institution	Universiti Teknologi MARA
collection	UiTM Institutional Repository
language	English
topic	Leadership Transformational leadership
spellingShingle	Leadership Transformational leadership Abd Hamid, Nadiah Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
description	Separation of ownership and control in large publicly owned firms has induced potential conflicts between the interests of managers and shareholders (Berle and Means, 1932). This is due to inconsistency between managers and shareholder's goals. This divergence of managers' and shareholders* objective may lead to acute conflict of interest in decisions making regarding the strategic orientation of the firm. Therefore, one key purpose of the board is to reduce the negative potential of the agency problem through monitoring, representation and oversight responsibilities. Thus, the current study aims to contribute in determining board characteristics of acquiring firms, which may response to the agency problem. The current study examines the difference on board characteristics between acquiring and non-acquiring firms and the associations between these characteristics and Chief Executive Officer (CEO) ownership. Three characteristics of board of directors are examined: board size, proportion of outside directors and dual leadership (separation of the CEO and Chairman's roles). Based on a sample of 62 acquiring and 62 non-acquiring firms (as control companies) in Malaysia over a period of 1999-2000, the study finds that only board size is significantly difference between acquiring and non-acquiring firms. In addition, the proportion of outside directors is negatively associated with the company type. This indicates that less number of outside directors on the board when the company acquires target company. Furthermore, the study reveals that board size and outside directors is negatively correlated with the percentage of shares owned by CEO. Finally, the study shows that CEO ownership is affected if the number of independent non-executive director more than non-executive director. These findings suggest that acquiring firms with larger percentage of shares owned by CEO and small number of board members and also small number of outside directors represented on the board would lead to greater agency problems. Therefore, in order to mitigate these problems the number of independent nonexecutive directors representing on the board should be increased at least to one third of the total members of directors on the board as suggested by Malaysian Code on Corporate Governance (MCCG).
format	Thesis
qualification_level	Master's degree
author	Abd Hamid, Nadiah
author_facet	Abd Hamid, Nadiah
author_sort	Abd Hamid, Nadiah
title	Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
title_short	Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
title_full	Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
title_fullStr	Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
title_full_unstemmed	Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid
title_sort	determinants of board characteristics of acquiring firms in malaysia / nadiah abd hamid
granting_institution	Universiti Teknologi MARA
granting_department	Faculty of Accountancy
publishDate	2001
url	https://ir.uitm.edu.my/id/eprint/2392/1/TM_NADIAH%20ABD%20HAMID%20AC%2001_5%201.pdf
_version_	1783733070638088192

Determinants of board characteristics of acquiring firms in Malaysia / Nadiah Abd Hamid

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