Measuring the Firm's Financial Value: Interrelationships with the ...

International Journal of Performance Measurement, 2011, Vol. 1, 59-78. 

Measuring the Firm’s Financial Value: Interrelationships with 

the Board Structure 

Sasivimol Meeamol 1 

Vimol Rodpetch 2 

Sarayut Rueangsuwan 3 

Binshan Lin 4 

Abstract 

The objective of this research is analyzing the relationship of a firm value with the 

structure of board members of firms that are listed in Thailand SET 100. The independent 

variables are board size, percentage of independent director, percentage of financial or 

accounting expertise in audit committee, independent chairman, CEO duality, and 

percentage of female directors. The dependent variable is firm value which is calculated 

by using Tobin’s Q score. The data used for the study are from financial statements 

between the years 2007 to 2009. There are 87 companies being investigated in this 

paper. The study also excludes financial, insurance, property fund, and banking sectors. 

The empirical result suggests that the structure of board members of a firm has the 

relationship with the value of a company and only CEO duality that shows the statistical 

significant. 

Keywords: Financial performance measurement; Firm value; Corporate governance; 

Tobin’s Q. 

1. Introduction 

Given the increasing importance of corporate governance in Thailand, many 

researches have studied the role of corporate governance in business management and 

control. Corporate governance consists of the set of processes, customs, policies, laws 

and institutions affecting the way a corporation is directed, administered or controlled. 

Corporate governance also includes the relationships among the many stakeholders 

involved and the goals for which the corporate is governed. Organization for Economic 

Co-operation and Development (OECD, 2004) defines corporate governance as the 

1 Faculty of Business Administration, Kasetsart University, Bangkok 10900, Thailand. 



4 BellSouth Professor, School of Business, Louisiana State University in Shreveport, Shreveport, USA.


system by which business corporations are directed and controlled. The corporate 

governance structure specifies the distribution of rights and responsibilities among 

different participants in the corporation such as, the board, managers, shareholders and 

other stakeholders, and spells out the rules and procedures for making decisions on 

corporate affairs (Kajola, 2008). In conclusion, corporate performance structure 

comprises internal control, market control, board control, corporate charter, law and 

regulation. 

About the Code of Corporate Governance in the Thailand Securities and Exchange 

Commission stated that the Board of Director is responsible for governing the firm 

through an objective, independent check on its management. Solomon (2004) stated that 

there should be accurate and free-flowing information going in and out of the board to 

promote a healthy, functioning corporate body; more than just assuming responsibility for 

the financial statements. Fama and Jensen (1983) theorize that the board of directors is 

the highest internal control mechanism responsible for monitoring the actions of top 

management. 

According to the meaning, principles and empirical research of corporate 

governance, those illustrate the important of corporate governance to organization. In 

Thailand, corporate governance is the concentrate area in the Securities and Exchange 

Commission (SEC) and the Stock Exchange of Thailand (SET), both institutes have 

disbursed to corporate governance. The SET focuses on internal control in improving its 

corporate governance of Thai firms, especially on the structure of board of directors 

(Yammeesri and Herath, 2010). 

Many empirical researches provide evidence about the important of including 

outside directors on the board for purposes of monitoring management in agency problem. 

The relation between board of director composition and firm value is particularly 

important to the accounting profession. Fama’s (1980) and following research conducted 

by Fama and Jensen (1983) also stated board composition and board of director’s 

recommendations propose that having higher percentage of outside directors increases the 

board’s effectiveness as a monitor of management. Fama and Jensen (1983) 

acknowledged that the board toned down the agency problem by acting as advisors to the 

CEO and executive managers, and to be boundary spanners in expanding the company 

linkage with the external environment, as well. 

According to the limited local studies on this accounting phenomenon also the 

increased importance of corporate governance in Thailand, this study empirically 

examines by attempting to assess the role of corporate governance practices, particularly 

those involving the structure of board of directors, in explanatory the firm value listed in 

the SET 100, Thailand. This study intends to provide the beneficial results to several 

stakeholders for bringing knowledge to improve the feature of corporate governance in 

business community. 

2. The oritical background and hypotheses development


A number of studies based on the relation between the structure of board of director 

and firm value argued that the structure of board of directors have the relation with the 

firm value. Various researches were conducted from a number of methodologies. The 

conceptual framework of this study is identified below. 

Independent Variable 

Board Structure 

- Board Size 

- % Independent Directors 

- % Financial or Accounting 

Expertise of Directors in 

Audit Committee 

- Independent Chairman 

- CEO Duality 

- % Female Directors 

Dependent Variable 

Firm Value 

- Tobin’s Q 

Figure 1. Conceptual Framework 

According to the conceptual framework above, we define the structure or 

characteristics of board of directors as independent variable and dependent variable is 

firm value, which measured by using Tobin’s Q score. Tobin’s Q score is computed in the 

periods that fit with the timeframe. Chung and Pruitt (1994) reported that Tobin’s Q 

measures firm performance under decision making in asset investment. 

The independent variables that fit with how to measure the board structure in this 

study are as follows: 1. Board Size, 2. Percentage of Independent Directors, 3. Percentage 

of Financial or Accounting Expertise of Directors in Audit Committee, 4. Independent 

Chairman, 5. CEO Duality, and 6. Percentage of Female Directors. 

As mentioned, several independent variables are defined to examine the relation 

between board structure and firm value: Case Study of Thai Listed Companies in SET 

100, which approaches from literature reviews, can be explained as follows: 

(1) Board Size (BS): Board size is measured by using total board of directors at the end 

of period. Total board of directors will be examined whether it can increase the 

value added of the firm. Pfeffer and Salancik (2003) suggested that the higher the 

number of directors, the higher financial performance. These findings also 

matched with what Delton et al. (1999) concluded that the number of the board 

members has correlations with financial performance which includes accounting 

measurement and current market value. Moreover, the board members also bring its


outside expertise that can improve the effectiveness of a firm. The information 

about the board members also gets published in the annual report or 56-1 form. The 

hypothesis is proposed as follows: 

H1a: The Tobin’s Q of firm listed in SET 100 is positively associated with board size. 

(2) Percentage of Independent Directors (ID): Percentage of independent directors is 

measured as independent directors to the entire number of board of directors, it 

indicates responsibility of directors to make sure that agency problem and the 

possibility of having nominees may reduce (Beiner et al., 2006; Helland and Sykuta, 

2005; Lee and Carlson, 2007). The hypothesis suggests the follow: 

H1b: The Tobin’s Q of firm listed in SET 100 is positively associated with Percentage 

of Independent Directors. 

(3) Percentage of Financial or Accounting Expertise of Directors in Audit Committee 

(FAE): Carcello et. Al. (2006) and DeFond et al. (2004) suggest that the proportion 

between numbers of financial or accounting expertise of directors in audit 

committee supports the transparency and the competence of the company. 

Education background is used to determine the qualification of experts. The 

hypothesis is as follow: 

H1c: The Tobin’s Q of firm listed in SET 100 is positively associated with Percentage 

of Financial or Accounting Expertise of Directors in Audit Committee. 

(4) Independent Chairman (ID): Independent chairman who has no personal 

involvement with the company prior joining the board is more likely to protect the 

benefit of an organization. The chairman position that is held by an independent 

chairman would also raise the visibility of practicing corporate governance. The 

information mentioned is also published in the annual report or 56-1 form. The 

hypothesis is as follow: 

H1d: The Tobin’s Q of firm listed in SET 100 is positively associated with 

Independent Chairman. 

(5) CEO Duality (CD): Finkelstein and D’Aveni (1994) pointed out that if CEO has 

multiple duties and assume double positions such as being a president and a CEO 

together at the same time, it may encourage him to be able figure out the way to 

deceive the company. The problem of CEO duality also complements with Mallette 

and Fowler (1992) about the possibility of passing information to outsiders. Thus, 

segregation of duties principle is very important for the company. The hypothesis 

is as follow: 

H1e: The Tobin’s Q of firm listed in SET 100 is negatively associated with CEO 

Duality.


(6) Percentage of Female Directors (FD): Smith et al. (2006) suggests that multiple 

genders allow company to increase competitiveness and lead to higher profit. 

Carter et al. (2003) supports the idea and also concludes that different gender 

generates mechanism to establish a check and balance system for a company. 

The following hypothesis is trying to prove the extent to which the proportion of 

female directors has an effect on the profit and market value of the company. The 

proportion of female and male directors can also be seen in the annual report or 

Form 56-1. The hypothesis is as follow: 

H1f: The Tobin’s Q of firm listed in SET 100 is positively associated with Percentage 

of Female Directors. 

In this study, the four control variables are defined in order to identify the specific 

impact of board structure on firm value. These control variables used in this study have 

also been included in several researches in the literature. 

(1) Firm Size (FS): Firm Size is measured as the natural logarithm of book value of 

total assets. Majamdar (1997) reported that there is a positive relation between firm 

size and firm performance. 

(2) Gearing Ratio (GEAR): Gearing Ratio is measured as total liabilities divided by 

total stockholder’s equity. Grossman and Hart (1982) and Jensen (1986) reported 

that leverage (measured by total liabilities divided by total assets) shows the 

positive signal of firm value and management. 

(3) Percentage of Sale Growth (SG): Percentage of Sale Growth is measured as the 

total sales of the current year minus total sales of the previous year divided by total 

sale of previous year. Mak and Kusnadi (2005) stated that sales growth is positively 

related to firm value. 

(4) Lagged Return on Assets (ROA): Lagged Return on Assets is measured as operating 

profit divided by average total assets. By the mean, average total assets are 

calculated as average of total assets of current year and total assets of previous year. 

According to dependent variables, independent variable and control variables, the 

regression model is defined as follows: 

Qt 

t 

1BSt 

2IDt 

3FAE 

t 

4ICt 

5 

CD 

t 

FD FS GEAR SG ROA 

6 

t 

7 

t 

8 

t 

9 

t 

10 

t1 

t 

Where: 

Q 

t 

: Tobin’s Q in the period of firm i in year t (Tobin’s Q) 

 

t 

: Constant at time t (Constant)


 

BS 

ID 

FAE 

IC 

CD 

FD 

FS 

GEAR 

SG 

ROA 

 

t 

: Coefficient of independent variables at time t or time t-1 (Coefficient) 

: Total board of directors of firm i at time t (Board Size) 

: Percentage of independent directors divided by total board of 

directors of firm i at time t (% Independent Directors) 

: Percentage of financial or accounting expertise of directors divided by 

total board of director of firm i at time t (% Financial or Accounting 

Expertise of Directors in Audit Committee) 

: A Dummy variable which a value of one if chairman of firm is the 

independent director and a value of zero otherwise, of firm i at time t 

(Independent Chairman) 

: A Dummy variable which a value of one if there is not a spilt between 

chairman of firm and CEO and a value of zero otherwise, of firm i at 

time t (CEO Duality) 

: Percentage of female directors of firm i at time t (% Female 

Directors) 

: The natural logarithm of book value of total assets of firm i at time t 

(Firm Size) 

: Total liabilities divided by total stockholder’s equity of firm i at time t 

(Gearing Ratio) 

: Total sales of the current year minus total sales of the previous year 

divided by total sale of previous year of firm i at time t (% Sale 

Growth) 

: Operating profit divided by average total assets of firm i at time t 

(Lagged Return on Assets) 

: Residual at time t (Error Terms) 

3. Research design 

In this research, the causal or explanatory approach will be applied. A panel data 

analysis will be conducted in this study. The sample size will be collected in Thailand 

SET 100 during year 2007 – 2009. Anyway the firms in the Banking, Insurance, Finance 

and Property Fund sector will not be included in this paper because the transactions of 

those industries will be different to other industries. Data will be collected on December 

29, 2009, total 87 firms, which have been shown in Appendix A. The secondary data is 

applied as source of data in this study. Appendix B and C shows the details of source of


secondary data such as the SET, SEC, website of listed firms, etc. 

Focusing in measurement of variables for regression model can explained as follows 

(Appendix B): 

BS : Total board of directors at time t (Board Size), will be calculated by counting 

the number of board of director shown in Form 56-1 at the year ended under the title 

“board of directors and management team” 

ID : Percentage of total independent directors at time t (% Independent Directors), 

will be calculated by counting the number of board of directors and the number of 

independent directors, shown in Form 56-1 at the year ended under the title “board of 

directors and management team” 

According to SET regulation, independent director (or outside director) will have 

outstanding shares in that firm not more than 0.05%. Also independent director must not 

be the management team, employee or advisor who has the fixed salary. Under SET 

regulation, the listed firm must have at least 3 independent directors. 

ID = Total independent directors x 100 

Total directors 

FAE : Percentage of financial or accounting expertise of directors in audit 

committee at time t (% Financial or Accounting Expertise of Directors in Audit 

Committee), will be calculated by counting the number of board of directors and the 

number of financial or accounting expertise of directors in audit committee, shown in 

Form 56-1 at the year ended under the title “board of directors and management team”. 

Under SET regulation, those directors must have knowledge in financial or accounting 

field by having at least a bachelor degree in finance or accounting science, or have 

apparently experiences in finance or accounting field. 

FAE= Financial or accounting expertise of directors in audit committee x 100 

Total audit committee 

IC : Dummy variable which a value of one if chairman of firm is independent 

director and a value of zero otherwise, at time t (Independent Chairman), will be 

calculated by checking whether chairman of directors is independent director, which be 

shown in Form 56-1 at the year ended under the title “board of directors and management 

team”. 

CD : Dummy variable which a value of one if there is not a spilt between chairman 

of firm and CEO and a value of zero otherwise, of firm i at time t (CEO Duality), will be 

calculated by checking whether there is not a spilt between chairman of firm and CEO, 

which be shown in Form 56-1 at the year ended under the title “board of directors and 

management team”.


FD : Percentage of female directors at time t (% Female Directors), will be 

calculated by counting the number of board of directors and the number of female 

directors, shown in Form 56-1 at the year ended under the title “board of directors and 

management team”. 

FD = Percentage of female directors x 100 

Total directors 

Q : According to theory of Tobin’s Q, Lindenberg and Ross (1981) studied about 

the valuation, they stated that the firm valuation can measure with market value of stock. 

Chung and Pruitt (1994) simplified the calculation method of Tobin’s Q, they stated that 

Tobin’s Q is measured as market value of common stock (market price of common stock 

multiply outstanding share volume) plus market value of preferred stock and market 

value of liabilities, divided by book value of assets that were used to replacement cost. 

( MP OSV 

) MV 

Q 

BV 

a 

p / s 

MV 

l 

Where: 

MP 

: Market price of common stock 

OSV : Outstanding share volume 

MV / 

: Market value of preferred stock 

p s 

MV 

l 

BV 

a 

: Market value of liabilities 

: Book value of assets 

4. Data analysis and empirical results 

The statistics used in this study consists of descriptive statistics, which are mean, 

standard deviation, Pearson’s product moment correlation coefficient, and inferential 

statistics with multiple regression analysis. 

Table 1. Descriptive statistics, average for 3 years (2007-2009) (N = 241) 

Variables Variable Description Min Max Mean Std. Dev. 

Q Tobin’s Q Score (Times) 0.34 7.20 1.36 0.81 

BS Board Size (Number) 5 18 12 2.5 

ID % Independent Directors (%) 18 80 38 12.5 

FAE % Financial or Accounting Expertise of 0 100 34 26.0 

Directors in Audit Committee (%) 

IC Independent Chairman (Dummy) 0 100 36.5 48.3 

CD CEO Duality (Dummy) 0 100 9.6 29.6 

FD % Female Directors (%) 0 38 10.4 9.7


FSMB Firm Size (million bath) 2,018 1,103,589 54,839 115,806 

GEAR Gearing Ratio (Times) 0 16.83 1.32 1.57 

SG % Sale Growth (%) (60) 369 9.6 39.89 

ROA Lagged Return on Assets (%) (22) 55 10.7 10.2 

Table 1 presents descriptive statistics of the variables which average for 3 years. The 

results show that the mean for 3 years of Tobin’s Q score is 1.36, minimum is 0.34 and 

maximum is 7.20. Average board size is 12, which the maximum is 18 whereas the 

minimum is 5. Average percentage of total independent directors is 38, which shown the 

maximum 80 and the minimum is 18. When focus on percentage of financial or 

accounting expertise of directors in audit committee, it shows the average is 34. Also 

when concentrate on percentage of chairman of firm is independent director, the average 

shows 36.5 Whereas the descriptive statistic shows the average percentage is 9.6 when 

there is not a spilt between chairman of firm and CEO. About average of percentage of 

female directors is shown 10.4. 

Focusing on control variables, the statistics show that average book value of total 

assets is 54,839 million baht. The gearing ratio which is measured as total liabilities 

divided by total stockholder’s equity and the average sales growth are 1.32 times and 9.6 

percent, respectively. In addition, average lagged ROA during year 2006 – 2008 is 10.7 

percent. 

Table 2. Descriptive statistics for each year, during year (2007-2009)(N07 = 75, N08 = 

82, N09 = 84) 

Variables Measurement Min Max Mean Std. Dev. 

Q 07 

0.43 7.20 1.61 0.92 

Q 08 

Times 

0.34 4.73 1.08 0.60 

Q 09 

BS 07 

BS 08 

BS 09 

ID 07 

ID 08 

ID 09 

FAE 07 

FAE 08 

FAE 09 

IC 07 

IC 08 

IC 09 

CD 07 

CD 08 

CD 09 

FD 07 

FD 08 

FD 09 

FSMB 07 

FSMB 08 

FSMB 09 

GEAR 07 

GEAR 08 

GEAR 09 

Number 

Percentage 

Percentage 

Dummy 

Dummy 

Percentage 

Million Baht 

Times 

0.34 

5 

6 

6 

19.0 

18.0 

18.0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2,018 

2,935 

2,582 

0.07 

0.11 

0.01 

4.73 

18 

18 

18 

69.0 

73.0 

73.0 

100 

100 

100 

100 

100 

100 

100 

100 

100 

38.0 

38.0 

38.0 

891,524 

885,192 

1,103,589 

11.46 

16.83 

9.93 

1.07 

12 

12 

12 

36.7 

38.5 

38.7 

35.6 

33.6 

33.6 

33.8 

36.9 

36.5 

10.0 

9.5 

9.3 

10.7 

10.2 

10.4 

50,459 

53,452 

58,671 

1.30 

1.39 

1.38 

0.60 

2.5 

2.5 

2.5 

12.4 

12.7 

12.8 

27.4 

25.9 

25.8 

47.6 

48.5 

48.4 

30.2 

29.5 

29.2 

10.1 

9.5 

9.8 

105,397 

105,811 

128,628 

1.51 

1.89 

1.87


SG 07 

SG 08 

SG 09 

ROA 06 

ROA 07 

ROA 08 

Percentage 

Percentage 

(36.5) 

(59.6) 

(55.4) 

(11.7) 

(21.5) 

(21.5) 

300.4 

369.2 

114.0 

37.8 

54.8 

44.5 

14.7 

16.5 

0.1 

11.9 

9.6 

10.3 

39.4 

49.5 

26.0 

9.2 

11.5 

9.8 

Table 2 presents descriptive statistics of the variable for each year during year 

2007-2009. It shows the Tobin’s Q is 1.61, 1.08 and 1.07 for year 2007-2009, respectively. 

Average board size for each year is 12 people, the maximum of every year is 18, whereas 

the minimum of year 2008 and year 2009 is 6 people and the minimum of year 2007 is 5. 

The average percentage of independent directors of year 2007, 2008 and 2009 are 36.7, 

38.5 and 38.7 percent, respectively. The minimum of percentage of independent directors 

in year 2007 is 19 percent and the maximum is 69 percent. Whereas the maximum and 

the minimum of percentage of independent directors in year 2008 and 2009 are equal, the 

minimum is 18 percent and the maximum is 73 percent. 

Focusing on average percentage of financial or accounting expertise of directors in 

audit committee of year 2007, 2008 and 2009 are 35.6, 33.6 and 33.6, respectively. 

Whereas, the maximum and the minimum is 100 percent and zero percent is equal for all 

years. For average chairman of firm is independent director of year 2007, 2008 and 2009 

are 33.8, 36.9 and 36.5, which the maximum and the minimum is 100 percent and zero, 

which is equal for all years. The descriptive statistics of CEO duality show the average 

percentage of year 2007, 2008 and 2009 are 10.0, 9.5 and 9.3 when there is not a spilt 

between chairman of firm and CEO which the maximum and the minimum is 100 percent 

and zero, which is equal for all years. About average of percentage of female directors of 

year 2007, 2008 and 2009 are 10.7, 10.2 and 10.4, which the maximum and the minimum 

is 38 percent and zero percent, which is equal for all years. 

Focusing on control variables, the statistics show that average book value of total 

assets of year 2007, 2008 and 2009 are 50,459 million baht, 53,452 million baht and 

58,671 million baht, whereas the maximum of year 2007, 2008 and 2009 are 891,524 

million baht, 885,192 million baht and 1,103,589 million baht, respectively. The 

minimum of year 2007, 2008 and 2009 are 2,018 million baht, 2,935 million baht and 

2,582 million baht, respectively. The average gearing ratio which is measured as total 

liabilities divided by total stockholder’s equity of year 2007, 2008 and 2009 are 1.30, 

1.39 and 1.38, respectively. Whereas the maximum and the minimum of gearing ratio of 

year 2007 are 11.46 and 0.07. The maximum and the minimum of year 2008 are 16.83 

and 0.11. Also the maximum and the minimum of year 2009 are 9.93 and 0.01. 

Moreover, the control variable which is the percentage of sale growth, the average of 

year 2007, 2008 and 2009 are 14.7, 16.5 and 0.1 percent. Whereas the maximum of year 

2007, 2008 and 2009 are 300.4, 369.2, and 114.0 percent, respectively. The minimum of 

year 2007, 2008 and 2009 are -36.5, -59.6, and 55.4 percent, respectively. Finally, 

average ROA of year 2006, 2007 and 2008 are 11.9, 9.6 and 10.3, whereas the maximum 

of year 2006, 2007, and 2008 are 37.8, 54.8 and 44.5, whereas the minimum of year 2006, 

2007 and 2008 are -11.7, -21.5 and -21.5 percent.


Before testing for the multiple regression analysis, we need to test correlation 

between all variables in order to check for auto-correlation, singularity and 

multicollinearity. Table 3 shows correlation coefficients for 3 years (year 2007 – 2009). 

It shows that there is no correlation among testing variables. 

Furthermore, we test the error of data. The histogram figure indicates that the 

distribution is abnormal. The probability plot has deviation. Besides, this study uses 

Durbin-Watson Test for checking auto-correlation, the Durbin-Watson Test shows d = 

1.743. It means there is degree of freedom among the variables. For testing regression 

standardized residual with regression standardized predicted value, the results states that 

there is no pattern on plots. Multicollinearity also is tested, all independent variables 

shows that all VIF is less than 5, it means board size, percentage of independent directors, 

percentage of financial or accounting expertise of directors in audit committee, 

independent chairman, CEO duality (%) and percentage of female directors do not relate 

for each other. 

Table 3. Correlation Coefficients for 3 years (year 2007-2009) 

Q BS ID FAE IC CD FD ROA FSMB GEAR SG 

Q 1.000 

BS -0.099 1.000 

ID -0.078 -0.175 1.000 

FAE -0.002 -0.206 0.146 1.000 

IC -0.116 -0.059 0.363 0.105 1.000 

CD 0.200 -0.151 -0.147 -0.037 -0.248 1.000 

FD -0.099 -0.136 0.122 0.167 0.214 0.002 1.000 

ROA 0.598 -0.183 0.100 0.021 -0.044 0.104 -0.029 1.000 

FS -0.033 0.273 0.281 -0.009 -0.121 -0.079 -0.028 -0.009 1.000 

GEAR -0.093 0.203 -0.149 -0.024 -0.085 -0.084 -0.125 -0.232 0.086 1.000 

SG -0.007 -0.113 0.054 0.090 0.040 0.069 0.052 0.124 -0.040 0.023 1.000 

Table 4 and table 5 show the result of pooled - data multiple regression analysis (R 

Square = 0.406), stated that independent variables have significant influence to dependent 

variable (p = 0.000, which is less than 0.05). In other word, board structure has an 

influence on a firm value. 

Focusing on coefficient between dependent variable and independent variable, we 

find that CEO duality and lagged return on assets have significant (p = 0.014 and p = 

0.000, which is less than 0.05, respectively), whereas, the other independent variables do 

not show the statistical significant. 

Results from the multiple regression show that there are 2 variables consistent with 

H1, the coefficient on board size (BS), percentage of financial or accounting expertise of 

directors in audit committee (FAE)) continue to be positive and no statistical significant 

(p > 0.05). Whereas, the hypothesis about CEO duality (CD), which there is not a spilt 

between chairman of firm and CEO, is not consistent with H1, it means that there is 

positively relation between Tobin’s Q and CEO duality at level 0.05. Furthermore, the 

Tobin’s Q is negatively relation with percentage of independent directors (ID), 

independent chairman (IC) and percentage of female directors (FD), which these


hypotheses will be rejected at level 0.05. Whereas, the Tobin’s Q is positively relation 

with lagged return on assets (ROA) and gearing ratio (GEAR), which are control 

variables. The Tobin’s Q is negatively relation with firm size (FS) and percentage of sale 

growth (SG). 

However, the regression model with dependent variable and independent variables 

without including 4 control variables in the model indicates that there is positive relation 

between Tobin’s Q and CEO duality (CD). This findings suggests that CEO who is also 

acting as a chairman has the influential effect on the firm value. 

Moreover, the results of single independent variable with 4 control variables indicate 

that there is positive relation between Tobin’s Q and CEO duality (CD) but having 

negatively relation between Tobin’s Q and percentage of independent directors (ID). 

According to the regression analysis for each year, the results of regression analysis 

of year 2007 and 2009 have a statistic significant at level 0.05. The results of regression 

analysis of year 2007 and year 2009 show the similar findings with pooled - data 

regression. 

Table 4. Summary of Regression Results 

Model 

Sum of 

Squares df Mean Square F Sig. 

1 Regression 66.230 10 6.623 16.273 .000 a 

Residual 96.866 238 .407 

Total 163.096 248 

a : Predictors : (constant), BS, ID, FAE, IC, CD, FD, ROA, FS, GEAR, SG 

Table 5. Regression Results for 3 year (year 2007 – year 2009) 

Variable Coefficient t-statistic 

Constant 1.816 2.004* 

BS 0.011 0.180 

ID -0.092 -1.593 

FAE 0.024 0.463 

IC -0.005 -0.089 

CD 0.132 2.486* 

FD -0.072 -1.353 

FS -0.048 -0.812 

GEAR 0.044 0.822 

SG -0.088 -1.724 

ROA 0.603 11.224* 

R 2 = 0.406 

*Significant level .05 

5. Research implication 

For Pooled-Data result, R Square is equal to 0.406. Considering this result with 

our hypotheses, the findings, using F-test, suggests that there is statistical significant


difference. However, if we consider the coefficient parameters of each variable, the 

results show that only one selected variable, CEO Duality, has the effect to the value of a 

company (p-value = .014). Using t-test, findings show there is negatively statistical 

significant different. The outcome suggests that the CEO who is also acting as a chairman 

of a company can influence the way the firm is run. The objectives of a company would 

also be fulfilling if the two positions are held by the same person. This finding is similar 

to Anderson and Anthony (1986). The result also indicates the larger the company, the 

more benefit and lose if a company has the leader that held two positions as CEO and 

chairman (Brickley et al. 1997). In conclusion, the reverse relationship between CEO 

duality and firm value happen and no statistical significant for these other variables. 

The results show that there is no statistical significant in board size, Mak and 

Kusnadi (2005) also supported the idea that more board of directors will not increase 

financial performance. Their findings stated that co-operation will be problematical if 

there is more board of directors. They also argue that it is not guarantee that more board 

of directors will generate better financial performance. 

For the percent of independent directors and percentage of financial or accounting 

expertise of directors in audit committee, the board member with freedom to make any 

decisions without involving self interested may not reflect the higher revenue than those 

that have less independent directors. One explanation of this outcome is the degree of 

freedom that independent directors have in making decisions. For the number of 

independent directors, the right amount depends on the work or expertise that the firm 

may request from these directors. Moreover, the agency theory also suggests that the 

independent directors should not hold more than 0.05 percent of stock owner. That said, 

this group of directors might not contribute to the company’s stock price. Bhagat and 

Black (2002) also concluded that a firm that has independent directors may not have what 

to do with a company stock price. 

The results show that the independent chairman is no statistical significant. 

Donaldson and Davis (1991) also supported the idea that independent director who serves 

as CEO is more likely to help increase the productivity of a company. There is also no 

statistical significant between male and female directors. Williams and O’Reilly (1998) 

suggested that to have directors from both gender would not allow better communication 

and will increase the emotional judgment. Lau and Murnighan (1998) argued that the 

higher the numbers of different gender in the board, the higher the possibility of having 

the longer discussion and time need to make decision. 

6. Conclusion 

Considering the mechanism of corporate governance in Thailand, the structure or 

characteristics of the board of directors seems to be the effective tool for solving the 

agency problems in the firms. Our purpose in this paper is to examining the relationship 

between board structure and firm value. Given the independent variables are board size, 

percentage of independent directors, percentage of financial or accounting expertise of 

directors in audit committee, independent chairman, CEO duality, and percentage of


female directors whereas dependent variable is Tobin’s Q score. 

The findings of this study suggest that structure of board of directors has a direct 

effect on the value of a firm. The result suggests that CEO duality has an incremental 

significant. Nevertheless, we can conclude that CEO duality has positive relationship 

with the value of a firm while other variables have no influence to the firm’s value. 

However, the regulator or government agency is responsible for setting up the rule and 

regulation and should apply the board structure concept. The result of this project can 

enhance the financial performance of the company and it is able to generate value of the 

firm eventually. 

The empirical results of this research have impacted on incremental effects of 

corporate governance practices in board responsibility’s area apparently. It helps 

improving the understanding of corporate governance mechanism in Thailand and it will 

be passed into any countries to apply this lesson for increase the quality of board 

composition. In short, this research provides benefits to both academic and real business 

world. 

The future research might focus on the relationship among other independent 

variables, and concentrate more on how the structure of a board of director is formed and 

the method to measure firm value. 

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APPENDIX A 

Classified Listed Company Accordance to the Sector in SET 100, 

As of December 29, 2009 

Sector 

Number of Company 

Agriculture 2 

Automotive 1 

Construction Materials 9 

Commerce 6 

Electronics 4 

Energy and Utility 14 

Food and Beverage 5 

Health Care Services 3 

Home & Office Products 1 

Industrial Materials & Machinery 3 

Information Communication and 

7 

Technology 

Media & Publishing 3 

Mining 1 

Packaging 0 

Petrochemical 2 

Property 17 

Tourism & Leisure 1 

Transportation & Logistics 8 

Total 87


APPENDIX B 

Dependent Variable and Independent Variables 

Type of 

Variable 

Independent 

Variable 

Dependent 

Variable 

Variable Symbol Measurement Source of Data 

BS Ratio Scale 

Form 56-1 

Annual report (SEC) 

ID Ratio Scale 

Form 56-1 


Form 56-1 

FAE Ratio Scale 

Board 


Structure 

Form 56-1 

IC Nominal Scale 


CD Nominal Scale 

Form 56-1 


FD Ratio Scale 

Form 56-1 


Form 56-1 

Firm Value Tobin’s Q Ratio Scale Annual report (SEC) 

SETSMART


APPENDIX C 

Details of Source of Secondary Data 

Sources of Type of Source of 

Secondary Data Secondary Data 

Type of Data 

SEC 

SET 

Form 56-1, year 2007 – 

2009 

Financial statements, 

year 2007 – 2009 

Book value of preferred stock 

Additional paid in capital – preferred 

stock 

Stockholder’s equity 

Outstanding common stock volume 

Total liabilities 

Total assets 

Total revenue 

Operating profit 

Number of outstanding common stock 

as of the year ended , year 2007-2009 

SEC 

SET 

Form 56-1, year 2007 – 

2009 

Annual report, year 

2007 – 2009 

Percentage of independent directors 

Percentage of financial or accounting 

expertise of directors in audit committee 

Percentage of female directors 

Total independent directors 

Total board of directors 

Number of audit committee 

Number of female directors 

Number of financial or accounting 

expertise of directors in audit committee 

Details of chairman 

Details of CEO 

SET SETSMART Stock price of common stock at the year 

ended, year 2007 – 2009


APPENDIX D 

Test of Statistics 

No. 

Hypothesis 1 






Hypotheses 

The Tobin’s Q of firm listed in SET 100 is 

positively associated with Board size. 


positively associated with Percentage of 

Independent Directors. 



Financial or Accounting Expertise of 

Directors in Audit Committee. 


positively associated with Independent 

Chairman. 


negatively associated with CEO Duality. 



Female Directors. 

Type of Statistical Tool 

Correlation Multiple 

Coefficient Regression

Measuring the Firm's Financial Value: Interrelationships with the ...

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