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The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia

This paper examined six corporate governance variables which are hypothesized to have an influence on firm’s financial performance in Malaysia. The variables encompassed four internal monitoring measures (CEO and chairman of the board, non-executive directors, audit committee and concentrated owners...

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Main Author: Allan Chang,
Format: Article
Language:English
Published: FEP 2015
Online Access:http://journalarticle.ukm.my/9586/1/8278-33170-1-PB.pdf
http://journalarticle.ukm.my/9586/
http://ejournal.ukm.my/ajac/issue/view/748/showToc
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spelling my-ukm.journal.95862016-12-14T06:50:22Z http://journalarticle.ukm.my/9586/ The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia Allan Chang, This paper examined six corporate governance variables which are hypothesized to have an influence on firm’s financial performance in Malaysia. The variables encompassed four internal monitoring measures (CEO and chairman of the board, non-executive directors, audit committee and concentrated ownership) with the remaining two variables being external measures (institutional investors and lenders). An empirical study was conducted based on data involving 420 Malaysian listed companies over a four-year period from 2009 to 2012. A combination of cross-sectional and time-series data was employed in the analysis. An econometric model using panel data regression techniques was employed to analyse performance of the firms using both fixed effects and random effects models. Using return on equity as the dependent variable, it was established that CEO duality (an internal monitoring measure) significantly influences the performance of firms. The study showed that a CEO who is also chairman of the board exerts a positive influence on company earnings. It suggests that CEO duality could increase performance of firms when these CEOs dominate the decision-making process in their companies. None of the other monitoring measures relating to independent directors, institutional investors, ownership structures, audit committee and banks played any role in influencing firm performance. FEP 2015 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/9586/1/8278-33170-1-PB.pdf Allan Chang, (2015) The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia. Asian Journal of Accounting and Governance, 6 . pp. 55-65. ISSN 2180-3838 http://ejournal.ukm.my/ajac/issue/view/748/showToc
institution Universiti Kebangsaan Malaysia
building Perpustakaan Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This paper examined six corporate governance variables which are hypothesized to have an influence on firm’s financial performance in Malaysia. The variables encompassed four internal monitoring measures (CEO and chairman of the board, non-executive directors, audit committee and concentrated ownership) with the remaining two variables being external measures (institutional investors and lenders). An empirical study was conducted based on data involving 420 Malaysian listed companies over a four-year period from 2009 to 2012. A combination of cross-sectional and time-series data was employed in the analysis. An econometric model using panel data regression techniques was employed to analyse performance of the firms using both fixed effects and random effects models. Using return on equity as the dependent variable, it was established that CEO duality (an internal monitoring measure) significantly influences the performance of firms. The study showed that a CEO who is also chairman of the board exerts a positive influence on company earnings. It suggests that CEO duality could increase performance of firms when these CEOs dominate the decision-making process in their companies. None of the other monitoring measures relating to independent directors, institutional investors, ownership structures, audit committee and banks played any role in influencing firm performance.
format Article
author Allan Chang,
spellingShingle Allan Chang,
The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
author_facet Allan Chang,
author_sort Allan Chang,
title The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
title_short The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
title_full The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
title_fullStr The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
title_full_unstemmed The role of internal and external corporate governance mechanisms on firm’s financial performance in Malaysia
title_sort role of internal and external corporate governance mechanisms on firm’s financial performance in malaysia
publisher FEP
publishDate 2015
url http://journalarticle.ukm.my/9586/1/8278-33170-1-PB.pdf
http://journalarticle.ukm.my/9586/
http://ejournal.ukm.my/ajac/issue/view/748/showToc
_version_ 1643737850295877632
score 13.211869

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