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/ http://journalarticle.ukm.my/9586/ http://journalarticle.ukm.my/9586/1/8278-33170-1-PB.pdf

id	ukm-9586
recordtype	eprints
spelling	ukm-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
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
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/ http://journalarticle.ukm.my/9586/ http://journalarticle.ukm.my/9586/1/8278-33170-1-PB.pdf
first_indexed	2023-09-18T19:55:18Z
last_indexed	2023-09-18T19:55:18Z
_version_	1777406488992546816

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

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