Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact?
Introduction/Main Objectives: This paper examines the relationship between financial leverage and board independence for firms listed on the Malaysian stock exchange. Research Methods: This research is conducted using sample of 265 non-financial firms listed on Bursa Malaysia from 2014 to 2018. Fin...
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| Format: | Article |
| Language: | English |
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Universitas Gadjah Mada
2023-01-01
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| Series: | Journal of Indonesian Economy and Business |
| Subjects: | |
| Online Access: | https://journal.ugm.ac.id/v3/jieb/article/view/4096 |
| _version_ | 1797627666339201024 |
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| author | Wai-Cheng Kok Wee-Yeap Lau Tien-Ming Yip |
| author_facet | Wai-Cheng Kok Wee-Yeap Lau Tien-Ming Yip |
| author_sort | Wai-Cheng Kok |
| collection | DOAJ |
| description |
Introduction/Main Objectives: This paper examines the relationship between financial leverage and board independence for firms listed on the Malaysian stock exchange. Research Methods: This research is conducted using sample of 265 non-financial firms listed on Bursa Malaysia from 2014 to 2018. Finding/Results: Our results show: first, board independence is essential in reducing firm leverage. However, board independence does not affect all firms equally. In particular, board independence has insignificant influences on the financial leverage of young or small firms. In contrast, the financial leverage of old or large firms is negatively associated with board independence. Second, the financial leverage of firms with low profitability is adversely affected by the presence of independent directors. However, the negative impact diminishes as the firms' profitability increases. Conclusion: These results indicate the importance of having independent directors for old, large, or low-profitability firms to reduce their financial leverage. These findings contribute to the stylised facts of the nexus between financial leverage and board independence.
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| first_indexed | 2024-03-11T10:27:37Z |
| format | Article |
| id | doaj.art-5d419fa8423b48679c76494d4e3d00fd |
| institution | Directory Open Access Journal |
| issn | 2085-8272 2338-5847 |
| language | English |
| last_indexed | 2024-03-11T10:27:37Z |
| publishDate | 2023-01-01 |
| publisher | Universitas Gadjah Mada |
| record_format | Article |
| series | Journal of Indonesian Economy and Business |
| spelling | doaj.art-5d419fa8423b48679c76494d4e3d00fd2023-11-15T08:57:31ZengUniversitas Gadjah MadaJournal of Indonesian Economy and Business2085-82722338-58472023-01-0138110.22146/jieb.v38i1.4096Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact?Wai-Cheng Kok0Wee-Yeap Lau1Tien-Ming Yip2School of Graduate Studies, Asia e University, Selangor, MalaysiaDepartment of Economics and Applied Statistics, Faculty of Business and Economics, Universiti MalayaDepartment of Economics and Applied Statistics, Faculty of Business and Economics, Universiti Malaya, Malaysia Introduction/Main Objectives: This paper examines the relationship between financial leverage and board independence for firms listed on the Malaysian stock exchange. Research Methods: This research is conducted using sample of 265 non-financial firms listed on Bursa Malaysia from 2014 to 2018. Finding/Results: Our results show: first, board independence is essential in reducing firm leverage. However, board independence does not affect all firms equally. In particular, board independence has insignificant influences on the financial leverage of young or small firms. In contrast, the financial leverage of old or large firms is negatively associated with board independence. Second, the financial leverage of firms with low profitability is adversely affected by the presence of independent directors. However, the negative impact diminishes as the firms' profitability increases. Conclusion: These results indicate the importance of having independent directors for old, large, or low-profitability firms to reduce their financial leverage. These findings contribute to the stylised facts of the nexus between financial leverage and board independence. https://journal.ugm.ac.id/v3/jieb/article/view/4096financial leveragecapital structureboard independenceone size fits allMalaysia |
| spellingShingle | Wai-Cheng Kok Wee-Yeap Lau Tien-Ming Yip Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? Journal of Indonesian Economy and Business financial leverage capital structure board independence one size fits all Malaysia |
| title | Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? |
| title_full | Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? |
| title_fullStr | Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? |
| title_full_unstemmed | Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? |
| title_short | Nexus between Financial Leverage and Board Independence of Public-Listed Firms: Is There Any Stylised Fact? |
| title_sort | nexus between financial leverage and board independence of public listed firms is there any stylised fact |
| topic | financial leverage capital structure board independence one size fits all Malaysia |
| url | https://journal.ugm.ac.id/v3/jieb/article/view/4096 |
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