Corporate governance structure and firm performance : empirical evidence from Brusa Malaysia, Kuala Lumper

Ali Ahmed, Huson Joher and Ali, Mohd 2005, Corporate governance structure and firm performance : empirical evidence from Brusa Malaysia, Kuala Lumper, International business & economics research journal, vol. 4, no. 9, pp. 59-66.

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Title Corporate governance structure and firm performance : empirical evidence from Brusa Malaysia, Kuala Lumper
Author(s) Ali Ahmed, Huson JoherORCID iD for Ali Ahmed, Huson Joher
Ali, Mohd
Journal name International business & economics research journal
Volume number 4
Issue number 9
Start page 59
End page 66
Publisher Clute Institute for Academic Research
Place of publication Littleton, Colo.
Publication date 2005-09
ISSN 1535-0754
Summary The issue of corporate governance has been emerging as important phenomena that has been searched extensively both in developed countries due to its strategic impact on the monitoring of management activities and firms’ performance. Yet little attempt has been made in developing countries like Malaysia to ascertain what constitute corporate governance and its impact on firm's performance. Therefore, this study aims at examining the structure of the corporate governance and its impact on firm’s performance. This study is based on 100 firms, which are the component of the Composite Index (CI) serve as market barometer. This study employs cross-sectional annual multiple regression model to examine, what constitutes the corporate governance structure and its impact on performance of the firm. The analysis was based on annual regression over 5 years period from 1997 through 2001. Three different blend of surrogate for corporate governance were developed for good corporate governance structure. These are the independent non-executive (outside) directors, audit committee and remuneration committee. To isolate the size effect from the impact of corporate governance structure on firm’s performance, firm’s size was also included are variable in the model. The ratio of net income before tax to total asset is used as a surrogate for firm’s performance. Evidence from the study indicates that there is partial relation between corporate governance structure and corporate performance. The presence of both audit and remuneration committee serves as an important monitoring device to control management activities that lead to increase firm's performance. While on average, the presence of independent nonexecutive directors does not provide any significant explanation for the firm's performance. However, the firm size appears to have significant impact on corporate performance.
Language eng
Field of Research 150303 Corporate Governance and Stakeholder Engagement
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2005, Clute Institute for Academic Research
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Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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