Board Characteristics and Capital Structure in Malaysian Market

Using fifty nine construction companies listed in Bursa Malaysia in 2010, this study investigates the impact of selected board of directors' characteristics on the level of leverage in a firm. Debt to equity is used as a measure of leverage. The characteristics on the board of directors that we examine are board size, CEO duality, directors' ownership, and ethnicity of directors. We employ two variables (profitability, and firm size) to control the relationships: Findings show a significant interpretation of capital structure decision by these factors as a whole. Specifically, the outputs of the regression that we run show negative and significant relationships between director ownership, ethnicity of directors, and profitability of firm, and size of firm. While we find that duality role of the CEO as a chairman has a negative but insignificant relationship with leverage, our sample shows that the companies which had CEO duality are few compared to those which had separated roles between a CEO and a chairman. However, there is a positive and significant correlation between debt level in the companies and size of board of director