Global Business and Management Research: An International Journal Vol. 10, No. 1 (2018, Special Issue) 356 The Moderating Role of Internal Audit Function on the Relationship Between Board of Director Characteristics and Business Performance in Malaysia Yuvaraj Ganesan Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia Gugass Kanthan Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia Muhammad Mushtaq* Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia & University of Turbat, Baluchistan, Pakistan Email: mushtaqbadini88@gmail.com Jasmine A.L. Yeap School of Management, Universiti Sains Malaysia, 11800 Penang, Malaysia * Corresponding Author Abstract Purpose – This study investigates the effect of board of directors (BOD onwards) characteristics (i.e. board size, gender diversity, CEO duality, board independence and multiple directorships) on business performance of publicly listed companies in Malaysia. Additionally, the internal audit function is introduced as the moderator in the relationship between BOD characteristics and business performance. Design/methodology/approach – A quantitative approach with cross-sectional design was adopted in this study, together with secondary data analysis on the annual reports of public listed companies. A total of 150 companies from manufacturing industries were selected for this study. Findings – The results based on the Ordinary Least Squares (OLS) method indicate that the multiple directorship has a direct effect on business performance. Furthermore, the internal audit function has significantly moderated the relationship between multiple directorship and the business performance. Research Limitations- The study only uses manufacturing firms in Malaysia. Moreover, the panel data with GMM estimator may provide more convincing results for future studies. Originality/value – The findings of this paper support agency theory. This study extends our understanding of the role of BOD characteristics and business performance in an emerging economy and builds a case for enforcement of strong corporate governance code. Keywords: Business Performance, Multiple Directorship, Internal Audit Function, Agency Theory