THE EFFECT OF BOARD OF DIRECTORS' COMPOSITION ON FIRM VALUE FOR MULTINATIONAL COMPANIES IN MALAYSIA

Abstract

This study was conducted with the objective of evaluating the effect of board composition on firm value for multinational companies (MNCs) incorporated in Malaysia. The scope of the study consists of MNCs listed on Bursa Malaysia in 2018 to 2020. The analysis of the study is carried out quantitatively using multiple regression panel data. Surplus value is used as a proxy for firm value. In addition to independent Board Members (ALP), ALP diversity and ALP skill matrix are also used as proxies for board composition. The results of the study show that the independent ALP and the ALP skill matrix have a positive effect on the value of MNC firms in Malaysia. On the other hand, ALP diversity and gender diversity do not show a significant relationship to the value of MNC firms in Malaysia compared to age diversity and ethnic diversity. The results of the study show that the diversity of the composition of the board of directors, especially in relation to the independent ALP, the ALP skills matrix, the diversity of age and ethnicity should be the main criteria for the organization's nomination committee to evaluate in making decisions about the new ALP nomination. This study is also expected to help policy and policy makers, especially MNC firms, Bursa Malaysia and the Malaysian Securities Commission in improving the quality of corporate governance of MNC companies in Malaysia.