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Financial constraints and corporate governance in family controlled firms in Malaysia

The hypothesis of financial constraints suggest that firms be denied profitable investment due to inaccessible to external capital markers as debt and equity financing are no longer perfect substitution after firms utilise internal capital. In view of reducing investments during global financial...

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Main Authors: Chu, Ei Yet, Lai, Tian So, Song, Saw Imm
Format: Article
Language:English
Published: 2015
Subjects:
HG Finance
Online Access:http://repo.uum.edu.my/27544/1/SSRNEJ%202015%201%2021.pdf
http://repo.uum.edu.my/27544/
http://doi.org/10.2139/ssrn.2584301
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spelling my.uum.repo.275442020-09-29T08:33:10Z http://repo.uum.edu.my/27544/ Financial constraints and corporate governance in family controlled firms in Malaysia Chu, Ei Yet Lai, Tian So Song, Saw Imm HG Finance The hypothesis of financial constraints suggest that firms be denied profitable investment due to inaccessible to external capital markers as debt and equity financing are no longer perfect substitution after firms utilise internal capital. In view of reducing investments during global financial crisis in 2008-2009, the study investigates 157 firms whether they face the issues of financial constraint in Malaysia. In general, non-family firms rely heavily on external debt market while family controlled firms utilising internal cash and reducing their dependence on debt market for their investments. However, the presence of CEO duality does not exaggerate the problem of financial constraints firms, but rather lead family firms to become stagnant in their investments. Independent directors appear to be ineffective in governance family firms for issuing financing for investment. Apparently, their presence in family firms reduce firms’ investment opportunities either through internal cash flow and external debt financing, which could reduce shareholders’ value in long-term. 2015 Article PeerReviewed application/pdf en http://repo.uum.edu.my/27544/1/SSRNEJ%202015%201%2021.pdf Chu, Ei Yet and Lai, Tian So and Song, Saw Imm (2015) Financial constraints and corporate governance in family controlled firms in Malaysia. SSRN Electronic Journal, 17 (3). pp. 1-21. ISSN 1556-5068 http://doi.org/10.2139/ssrn.2584301 doi:10.2139/ssrn.2584301
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Chu, Ei Yet
Lai, Tian So
Song, Saw Imm
Financial constraints and corporate governance in family controlled firms in Malaysia
description The hypothesis of financial constraints suggest that firms be denied profitable investment due to inaccessible to external capital markers as debt and equity financing are no longer perfect substitution after firms utilise internal capital. In view of reducing investments during global financial crisis in 2008-2009, the study investigates 157 firms whether they face the issues of financial constraint in Malaysia. In general, non-family firms rely heavily on external debt market while family controlled firms utilising internal cash and reducing their dependence on debt market for their investments. However, the presence of CEO duality does not exaggerate the problem of financial constraints firms, but rather lead family firms to become stagnant in their investments. Independent directors appear to be ineffective in governance family firms for issuing financing for investment. Apparently, their presence in family firms reduce firms’ investment opportunities either through internal cash flow and external debt financing, which could reduce shareholders’ value in long-term.
format Article
author Chu, Ei Yet
Lai, Tian So
Song, Saw Imm
author_facet Chu, Ei Yet
Lai, Tian So
Song, Saw Imm
author_sort Chu, Ei Yet
title Financial constraints and corporate governance in family controlled firms in Malaysia
title_short Financial constraints and corporate governance in family controlled firms in Malaysia
title_full Financial constraints and corporate governance in family controlled firms in Malaysia
title_fullStr Financial constraints and corporate governance in family controlled firms in Malaysia
title_full_unstemmed Financial constraints and corporate governance in family controlled firms in Malaysia
title_sort financial constraints and corporate governance in family controlled firms in malaysia
publishDate 2015
url http://repo.uum.edu.my/27544/1/SSRNEJ%202015%201%2021.pdf
http://repo.uum.edu.my/27544/
http://doi.org/10.2139/ssrn.2584301
_version_ 1680323128046125056
score 13.211869

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