Corporate governance reform in Malaysia: Board size, independence and monitoring

Boards of directors and corporate governance have gained much attention in recent years. Many reforms have been made, especiallyon board composition to ensure that boards of directors are effective, in order to improve corporate governance. The Malaysian Code on Corporate Governance codified the best practices of good governance and described optimal corporate governance structures. However, due to a different context for business practices and the nature of the business environment in emerging markets, we expect that the determinants of board structure will differ from those in developed markets. Our study investigates the determinants of board structure for Malaysian firms from 2000 to 2007. We also examine trends in corporate board structure and the level of compliance of boards of directors in Malaysia with the requirements of the Malaysian Code on Corporate Governance. Overall, we find that after an increase at the beginning of the study period, and then a decrease, board size remained globally stable over the period studied while board independence has shown an upward trend in recent years.