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Does directors’ experience positively moderate the impact of board busyness on firm efficiency? Evidence from Asia-Pacific

Khar Mang Tan (School of Economics and Management, Xiamen University, Sunsuria City, Malaysia)
A.N. Bany-Ariffin (Faculty of Economics and Management, University Putra Malaysia, Serdang, Malaysia)
Fakarudin Kamarudin (Faculty of Economics and Management, University Putra Malaysia, Serdang, Malaysia)
Norhuda Abdul Rahim (Faculty of Economics and Management, University Putra Malaysia, Serdang, Malaysia)

Asia-Pacific Journal of Business Administration

ISSN: 1757-4323

Article publication date: 1 November 2019

Issue publication date: 4 November 2019

Abstract

Purpose

The purpose of this paper is to examine the impact of board busyness on firm efficiency in the context of directors’ experience, specifically on directors’ experience that moderates the impact of board busyness on firm efficiency. Directors’ experience is examined by exploring both depth (board tenure) and breadth (number of former listed directorship) of experience.

Design/methodology/approach

This paper employs data envelopment analysis (DEA) to examine firm efficiency. Then, fixed effect panel regression analysis is applied to test the direct and moderating effect based on a sample of firms in the selected Asia-Pacific countries.

Findings

Significant positive evidence for the moderating effect of directors’ experience on the impact of board busyness on firm efficiency is documented.

Practical implications

Findings are essential for managers, country policymakers and potential investors as inputs to improve the current company practices, laws and policies through the notion that directors’ experience does enable the busy board to contribute to improved firm efficiency.

Originality/value

This paper contributes to the debated perspectives on board busyness by providing initial evidence that directors’ experience positively moderates the impact of board busyness on firm efficiency.

Keywords

Acknowledgements

The authors would like to thank the editors and the anonymous referees of the journal for constructive comments and suggestions, which have significantly helped to strengthen this paper. Furthermore, the authors would like to express their special thanks to: Xiamen University Malaysia Research Fund Vote No. ISEM/0021 sponsored by Xiamen University Malaysia and Universiti Putra Malaysia Grant Putra Vote No. 9484200 sponsored by Universiti Putra Malaysia. The usual caveats apply.

Citation

Tan, K.M., Bany-Ariffin, A.N., Kamarudin, F. and Abdul Rahim, N. (2019), "Does directors’ experience positively moderate the impact of board busyness on firm efficiency? Evidence from Asia-Pacific", Asia-Pacific Journal of Business Administration, Vol. 11 No. 3, pp. 232-250. https://doi.org/10.1108/APJBA-01-2019-0008

Publisher

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Emerald Publishing Limited

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