Malaysia Corporate

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Ownership structure, corporate

governance and corporate

performance in Malaysia

Nazli Anum Mohd Ghazali

Corporate

governance and

performance

109

Department of Accounting, Kulliyyah of Economics and Management Sciences,

International Islamic University Malaysia, Kuala Lumpur, Malaysia

Abstract

Purpose – Following the 1997 Asian financial crisis, the Malaysian Government introduced new

regulations on corporate governance, recognizing the importance of restoring market confidence. The

purpose of this paper is to evaluate the impact of the implementation of these new regulations on

corporate performance.

Design/methodology/approach – Regression analysis was performed to examine factors

influencing corporate performance. Ownership structure was represented by director ownership,

foreign ownership and government ownership, and corporate governance was proxied by board size

and independence. Corporate performance was measured by Tobin’s Q.

Findings – Using data from the year 2001 annual reports of 87 non-financial listed companies included

in the composite index, the results showed that none of the corporate governance variables was

statistically significant in explaining corporate performance. Nonetheless, two ownership variables,

namely the government as a substantial shareholder and foreign ownership, were statistically

significantly associated with Tobin’s Q.

Research limitations/implications – The regulations on corporate governance were implemented

in 2001, perhaps it was too early to analyze results for the financial year 2001 as regulatory changes may

take a few years before it could be expected to show positive or intended results.

Practical implications – An implication of this finding is that regulatory efforts initiated after the

1997 financial crisis to enhance corporate transparency and accountability did not appear to...