The Effect of Board Structure on Shareholders’ Wealth in Small Listed Companies in Malaysia

Using content analyses, this study examines whether board structure of small listed companies influence their shareholders’ wealth. This study focuses on three elements of board structure, namely, board size, board composition and directors’ remuneration to examine the relationship between board structure and shareholders’ wealth. Shareholders’ wealth is measured by the return on investment and earnings per share. The results show that out of the three elements of board structure, board size and board composition play an important role in influencing shareholders’ wealth in small listed companies. The results support the findings in earlier studies that large number of directors and the proportion of executive directors in a board would instil better decision-making policy. The results in this study, however, did not support the contention that there is a significant relationship between the directors’ remuneration and financial performance. The results in this study complement previous studies and provide some understanding on the importance of practicing good corporate governance. Keywords: Board structure, board size, board composition, director remuneration, shareholders’ wealth, Malaysia