Moderation of directors' education on board busyness-firm efficiency
ISSN: 0025-1747
Article publication date: 23 March 2020
Issue publication date: 4 September 2020
Abstract
Purpose
The purpose of this paper is to enhance the understanding of the long-debated impact of board busyness within a new framework of firm efficiency in the selected developed and developing Asia–Pacific countries, by assessing the moderation of directors' education towards the relationship between board busyness and firm efficiency. The extant literature on board busyness demonstrates to a lack of clarification of the relationship between board busyness and firm efficiency.
Design/methodology/approach
The sample for this paper comprises a panel data of 800 firms in a cross-country context of the selected developed and developing Asia–Pacific countries during the recent period of 2009–2015. This paper performs a non-parametric Data Envelopment Analysis to measure firm efficiency and panel regression analysis to examine the moderation of directors' education.
Findings
This paper provides support for the busyness hypothesis by documenting that the busy boards are likely to reduce firm efficiency. Moreover, this paper renders support to the upper-echelons theory by demonstrating that the impact of board busyness on firm efficiency is likely to turn positive in the presence of directors' education.
Practical implication
This paper highlights practical implication for managers especially in the Asia–Pacific region who seek to enhance firm efficiency, which is essential for firms in attaining the primary goal of profit maximization.
Originality/value
This paper builds on the extant literature by providing a contemporary research path regarding the moderation of directors' education to explain the long-debated impact of board busyness within a new framework of firm efficiency, based on a recent and significant sample of Asia–Pacific countries.
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, Universiti Putra Malaysia Grant Putra Vote No. 9632100 sponsored by Universiti Putra Malaysia and Universiti Putra Malaysia Grant IPS Vote No. 9651500 sponsored by Universiti Putra Malaysia. The usual caveats apply.
Citation
Tan, K.M., Kamarudin, F., Bany-Ariffin, A.N. and Abdul Rahim, N. (2020), "Moderation of directors' education on board busyness-firm efficiency", Management Decision, Vol. 58 No. 7, pp. 1397-1423. https://doi.org/10.1108/MD-09-2017-0905
Publisher
:Emerald Publishing Limited
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