Firm Size as a Moderator between Corporate Governance and Risk-Taking in Malaysian Banks

This study investigates the moderating effect of firm size in the relationship between corporate governance (board size, board independence and ownership concentration) and banks’ risk-taking (insolvency risk and credit risk). Secondary data (annual reports) was collected from a sample of 21 Malaysian commercial banks covering the 2005–2014 accounting period. An empirical model using pooled ordinary least square (OLS) and generalized method of moments (GMM) was used to analyse the data. The results indicate that board size, board independence and ownership concentration is negatively associated to bank risk taking. In addition, the study shows that firm size moderates relationship between corporate governance and risk-taking.