Social capital and selection criteria of independent non-executive directors: some evidence from Malaysia

Abstract

The overall purpose of this study is to explore and obtain empirical evidence on the selection criteria of independent non-executive directors (INEDs) of Malaysian public listed companies, based upon social capital characteristics. Results derived from face-to-face interviews with 27 company directors representing companies listed on the stock exchange indicate that social ties with existing board members and directors' reputation could be important antecedents in the appointment of potential candidates. Another social capital aspect investigated, director's ethnic background, did not garner large agreed responses as a selection criteria. Directors from ethnic background different from the owners of the company were selected for their human capital attributes, as a legitimating device and as a means of linking the company to important external parties. In spite of this, however, those directors constitute a minority in terms of numerical representation on boards.