BOARD SIZE, BOARD COMPOSITION AND PROPERTY FIRM PERFORMANCE

Abstract

In light of the 1997 Asian financial crisis, the effectiveness of good governance in Asian economies has been a confronting issue. Agency problems arise when ownership is separated from management. This situation raised the key issue in corporate governance of how to effectively monitor managers and to exercise control so that managers act in the best interest of the shareholders (Zhuang, Edwards and Capulong, 2001). Amongst others, the existence of a board of director is an important system for shareholding monitoring and control where board composition is the most common aspect discussed. Despite the survey indicating preference for good corporate governance, empirical research examining governance mechanisms in relation to performance has revealed mixed and inconclusive findings. This research empirically examines the relationship between board composition and performance of property companies listed at Bursa Saham, Malaysia. Specifically, the research question that will be the basis for hypothesis formulation is as follows: • Does board composition of a firm, namely, board size, percentage of executives have an effect on firm performance? Key words: board of directors, corporate governance, listed property firms.