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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...