Do board matters really matter?: an exploratory study of listed companies in Singapore from a firm performance and risk perspective

Tony Tan

Research output: ThesisDoctoral Thesis

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Abstract

In light of recent scandals, frauds, and corporate misdoings involving Chinalinked stocks listed in Singapore, including Fibrechem Technologies, Beauty China and Sino-Environment, this research study began with one fundamental question: Do board matters REALLY matter? That is, have board governance practices improved in Singapore and do they impact firms' performance and/or risk profiles? This research is important as to the researcher's knowledge, it is the first study to look at the effects of the introduction of the code of corporate governance practices in Singapore, and provides empirical proof of whether this has resulted in improvement(s) by listed companies in Singapore of their board governance practices and, if so, whether these have impacted firm performance and/or risk. Using agency theory as the theoretical framework and a sample size of 227 companies listed on the mainboard of the Singapore Exchange, the study tests several hypotheses concerning six board variables under the 'Board Matters' section of the Singapore code of corporate governance. A comparative analysis found that between the application of the 2001 Code and the revised version (2005 Code), the change was significant and positive for five (out of six) of the board variables and the board quality composite measure, with compliance with the spirit of the code changing more than in form. The change, however, was not statistically significant for the board leadership variable. The study also found that from a firm performance perspective, the only board variable that was positively associated with the return on equity accounting measure was linked to companies that undertook a formal evaluation of their boards while from a risk perspective, it found that firms that had boards with greater independence and a less independent chairman were associated with lower share price volatility.
Original languageEnglish
QualificationDoctorate
Publication statusUnpublished - 2010

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