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Jurnal Ekonomi Malaysia

52 (2) 2018 231 – 251

Firm Efficiency and Board Busyness: Empirical Evidence in Southeast and Northeast Asia
Kecekapan Firma dan Kesibukan Lembaga Pengarah: Bukti Empririk di Asia Tenggara dan Asia Timur Laut

Faculty of Economics and Management
University Putra Malaysia
43400 UPM Serdang
Selangor Darul Ehsan
MALAYSIA

carmen_5328@yahoo.com

Faculty of Economics and Management
Universiti Putra Malaysia
43400 UPM Serdang
Selangor Darul Ehsan
MALAYSIA

fakarudinkamarudin@gmail.com

Faculty of Economics and Management
University Putra Malaysia
43400 UPM Serdang
Selangor Darul Ehsan
MALAYSIA

bany@upm.edu.my

Faculty of Economics and Management
Universiti Putra Malaysia
43400 UPM Serdang
Selangor Darul Ehsan
MALAYSIA

huda@upm.edu.my

Abstract

Drawing on technical efficiency concept, the production of outputs from the inputs of firms is theoretically associated with firm managerial factors. This study therefore attempts to empirically investigate the relationship between board busyness and firm efficiency in selected countries of Southeast and Northeast Asia region for seven years. This study first measures technical efficiency of firms by using non-parametric Data Envelopment Analysis (DEA). Predominantly, this study investigates the proposed relationships of board busyness and firm efficiency by performing panel regression analysis. The results from regression analysis show that the board busyness significantly reduces firm efficiency, supporting the busyness hypothesis. The significant practical implications of study include: firstly, the managers who pursue to enhance firm efficiency in achieving the goals of profit maximization are encouraged to prevent their firms from having busy boards. Secondly, the regulators and policy-makers who intend to prevent the overcommitted issue of busy boards are suggested to review and enforce the restrictions and regulations on board busyness. Thirdly, the potential investors who intend to make investment are urged to consider busy boards as an unfavourable signal.

Keywords

Board busyness; Data Envelopment Analysis; firm efficiency; Northeast Asia; panel regression analysis; Southeast Asia

Author’s Acknowledgement

We would like to thanks the editors and the anonymous referees of the journal for constructive comments and suggestions, which have significantly helped to improve the contents of the paper. Furthermore, special thanks to: 1) Universiti Putra Malaysia Grant Putra Vot No. 9632100 sponsored by Universiti Putra Malaysia; 2) Fundamental Research Grant Scheme (FRGS) Vot No. 5524716 sponsored by Malaysian Ministry of Higher Education; 3) Universiti Putra Malaysia Grant IPM Vot No. 9473700 sponsored by Universiti Putra Malaysia; 4) University Grant Phase 1/2017 research code (PPP/ FEM/0117/051000/11917) sponsored by Universiti Sains Islam Malaysia; 5) University Grant Phase 2/2017 research code (PPP/FEM/0217/051000/10218) sponsored by Universiti Sains Islam Malaysia and 6) USIM/YTI/FEM052002/41118 sponsored by Yayasan Tun Ismail Mohamed Ali Berdaftar (YTI) Permodalan Nasional Berhad (PNB) as an organisations that funded our research. The usual caveats apply.

http://dx.doi.org/10.17576/JEM-2018-5202-19
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Tan, , Kamarudin, , Bany-Ariffin, , & Abdul Rahim, (2018). Firm Efficiency and Board Busyness: Empirical Evidence in Southeast and Northeast Asia. Jurnal Ekonomi Malaysia, 52(2), 231–251. http://dx.doi.org/10.17576/JEM-2018-5202-19

@article{tan2018firm,
  title={Firm Efficiency and Board Busyness: Empirical Evidence in Southeast and Northeast Asia},
  author={Tan, Khar Mang and Kamarudin, Fakarudin and Bany-Ariffin, A.N. and Abdul Rahim, Norhuda},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={2},
  pages={231—251},
 

year={2018},
}

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