Board independence and private information-based trading: evidence from Malaysia


Khong, Jiunn Shyan and Hooy, Chee Wooi and Lye, Chun Teck (2021) Board independence and private information-based trading: evidence from Malaysia. International Journal of Managerial Finance. pp. 1-22. ISSN 1743-9132

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This study investigates the effect of board independence on private information-based trading (PIBT) events. This study also examines the interaction effects of firm's disclosure quality and the statutory and demographic roles of independent directors and board diversity attributes, respectively, on the relationship between board independence and PIBT. This study uses panel data of 811 non-financial public listed companies in Bursa Malaysia for the sample period 2009–2017. The dynamic general method of moments (DGMM) is used for the dynamic panel data estimation and to address the potential endogeneity problem. The results show that board independence has a negative effect on PIBT and the effect could be strengthened by firm's disclosure quality, women independent directors and board gender diversity, but attenuated by CEO duality. The overall result suggests that apart from independent audit committee, the statutory and demographic attributes of independent directors and board diversity, and firm's disclosure quality are complementary to board independence in preventing persistent PIBT.

Item Type: Article
Uncontrolled Keywords: Disclosure of information
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD2350.8-2356 Large industry. Factory system. Big business > HD2709-2930.7 Corporations. Including international business enterprises, diversification, industrial concentration, public utilities > HD2741 Holding companies. Corporate governance
Divisions: Faculty of Business (FOB)
Depositing User: Ms Nurul Iqtiani Ahmad
Date Deposited: 30 Aug 2021 10:49
Last Modified: 30 Aug 2021 10:49


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