Board of Directors’ Tenure and Firm Performance: Evidence from Malaysia
Tempoh Pengarah Lembaga dan Prestasi Firma: Bukti dari Malaysia

Department of Accounting
Faculty of Business & Economics
Universiti Malaya
50603 Kuala Lumpur, MALAYSIA

oonelaine@um.edu.my

Department of Accounting
Faculty of Business & Economics
Universiti Malaya
50603 Kuala Lumpur, MALAYSIA

chia.winney8@gmail.com

Abstract

Considering the prevalence of government-linked and family-owned firms in Malaysia, as well as recent financial scandals, understanding how board directors’ tenure affects firm governance and performance is crucial. Therefore, this paper examined the impact of director tenure on firm performance in Malaysia, focusing on four types of directors: chairman, executive director, independent director, and affiliated director. Drawing on Agency Theory and Resource Dependence Theory, we analyzed data from the top 300 non-financial firms listed on the Main Board of Bursa Malaysia from 2017 to 2019, using ROE, ROA, and Tobin’s Q as indicators of performance. Our findings show a significant positive association between chairman tenure and all three firm performance measures. In contrast, the tenure of independent and affiliated directors is negatively associated with Tobin’s Q, while executive directors’ tenure is not statistically significant for any performance measure. These findings highlight the varying effects of director tenure on governance and firm outcomes. This study offers important insights for academics, policymakers, and practitioners, particularly regarding the need for regulatory reforms. We recommend that regulators, such as Bursa Malaysia and Securities Commission Malaysia, reassess and tighten the definitions and tenure limits for independent and affiliated directors to strengthen board independence and enhance governance quality.

Keywords

affiliated directors; chairman; Directors’ tenure; executive directors; firm performance; independent directors
https://doi.org/10.17576/pengurusan-2025-74-7

Citation

Oon, E. Y. N., & Chia, W. (2025). Board of Directors’ Tenure and Firm Performance: Evidence from Malaysia. Jurnal Pengurusan, 74, –. https://doi.org/10.17576/pengurusan-2025-74-7

@article{oon2025board,
  title={Board of Directors’ Tenure and Firm Performance: Evidence from Malaysia},
  author={Oon, Elaine Yen Nee and Chia, Winney},
  journal={Jurnal Pengurusan},
 

volume={74},
  number={},
  pages={—},
  year={2025},
  doi={https://doi.org/10.17576/pengurusan-2025-74-7},
  publisher={Penerbit UKM},
}

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