Board characteristics and real performance in Malaysian state-owned enterprises (SOEs)

Abstract

Purpose The purpose of this paper is to investigate the relationship between board characteristics and real performance among state-owned enterprises (SOEs) in Malaysia in a longitudinal period following the introduction of transformation policy. Design/methodology/approach The study deviates from prior research in utilising a real performance measure rather than traditional measures of performance. The authors adopt the quantile regression approach to examine the impact of board characteristics on real performance in a comparison using ordinary least squares. Findings The results of quantile regression reveal that the impact of board mechanisms on real performance was not as expected. Specifically, board size and duality had a bearing on real performance. Board independence also is considered as influential factor through the time. However, such effects were not homogenous across different quantiles. The dummy year variable to compare the period pre- and post-transformation policy reveals that the dummy year is not significant, indicating that performance post-transformation is indifferent compared to the pre-transformation policy period. Practical implications It is important for government to reconsider the policies embedded in the transformation policy. This study provides insights on the enhancement of board effectiveness and new developments regarding GLCs. Originality/value This is an early to attempt to measure real performance and its link to board characteristics in SOEs post-transformation policy.

Intellectual Capital Disclosures and Audit Components in Non-Discretionary Income

“…Hypothesis 6a is rejected as no evidence was found that are able to correlate between Audit Committee Quality and NDNI. This result is in line with the previous study done by Shawtari et al, (2017) and Siregar and Utama (2008), in which the result of the studies failed to find significant positive correlation between ACqual and firm performance. The reason behind the insignificant correlation might be because of the usage of audit service from big 4 public accounting firm are found more in large sized corporation compared to small sized corporation.…”

“…All variable is scaled with total assets. Discretionary accrual itself is obtained from Modified Jones Model and can be seen from previous study by Shawtari et al, (2017). The complete formula is as follows:…”

“…Profitability ratio becomes main measurement used to evaluate the financial performance of a corporation in the investment activity that is commonly used by the investors. In measuring the firm performance, this study uses the research study previously done by Shawtari et al, (2017). This study uses three measurements as the future profitability.…”

The Effect of Board Diversity on Real Earnings Management: Empirical Evidence From Jordan

“…Elected by a company's shareholders, the board of directors are responsible for the financial and strategic decisions in the business firms (Alam, Chen, Ciccotello, & Ryan, 2014). In this regard, Shawtari, Mohammed, Abdul Rashid, and Ayedh (2017) explained that the composition of the board is an important mechanism to guarantee board effectiveness. The important strategic role of BOD is to work for the financial reporting and delivering accounting information to its users for which earnings management cannot be overlooked.…”

A Model Constructed to Evaluate Sustainable Operation and Development of State-Owned Enterprises after Restructuring

“…Shawtari et al [10] used a quantile regression reveal to investigate the relationship between board characteristics and real performance among SOEs in Malaysia in a longitudinal period following the introduction of the transformation policy. The result indicated that the post-transformation performance is indifferent compared with the pre-transformation policy period.…”