Journal of Business Law and Ethics

Board Governance and Firm Performance: A Panel Data Analysis
Zuriawati Zakaria, Noorfaiz Purhanudin, Yamuna Rani Palanimally

Abstract
This study presents the relationship between board governance and firm performance of the Malaysian listed Trading and Services sector by using panel random effects model. The study examines 73 firms for the period of six years from 2005 to 2010. This study also examines the effect of board governance during subprime crisis which occurred in 2007 and 2008. On average, eight directors sat on the board with three independent nonexecutive directors. After controlling the effect of investment opportunities, firm age, leverage and firm size, the result revealed that board size positively influences firm performance. Board independent and foreign board members are insignificant effect on the Trading and Services firms performance. The firm performance also negatively influence by investment opportunity, leverage and firm size. During the crisis period (2007-2008), firm performance negatively affected by board independent. The greater the firm investment opportunity, leverage and firm size, the lower it will be the performance of the firm.

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