Board Characteristics, Company of Origin and Performance: A Study of Malaysian Shari’ah-Compliant Listed Companies
Abstract
The Shari’ah compliance advocates accountability and transparency in governance through Islamic
principles whereby those Shari’ah companies have to portray good example to their non-Shari’ah
compliant. This study aims to investigate the relationship between board characteristics and company of
origin with Shari’ah-compliant companies’ performance by employing multi regression analysis of 1000
companies for the year 2007 to 2010. Using ROA, the finding shows that company of origin has
significant negative association with company performance while Tobin’s Q revealed insignificant result.
The result also revealed that only duality role has significant negative association with company
performance by using Tobin’s Q whereas insignificant result appears for ROA. This study contributes to
the corporate governance literature from the perspective of Shari’ah-compliant companies. It is
envisaged to assist Bursa Malaysia, Securities Commission and regulators in improving effective
corporate governance and stringent screening procedures specifically for non-compliant companies that
opt to Shari’ah compliant. Furthermore, the results would be as a baseline to the organizations to attain
the corporate objectives by emphasizing a greater accountability in the governance practice.
Keywords: Board of directors, Malaysia, performance, Shari’ah
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