Does corporate governance affect the corporate performance persistence by Return on assets in listed companies of Malaysian stock?

Document Type : Original Article

Authors

1 Department of Accounting, Faculty of Management and Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran.

2 Department of Accounting, Faculty of Management and Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran.

3 Accounting Research Institute (ARI) Level 12, SAAS Building University Technology MARA Malaysia

Abstract

Corporate governance is a mechanism used to reduce the conflict of interests and agency costs. It consists of intrinsic and extrinsic mechanisms. Company ownership structure is one of the most important extrinsic mechanisms of corporate governance and shareholders are able to monitor and control the company’s directors’ performance enabling them to reduce the costs and increase the firm value. This study aims to check whether corporate governance effect by by Return on assets (ROA) on the corporate performance persistence in listed companies of Malaysian stock and also to investigate the corporate governance practices in the registered companies in Bursa MY and their outcome on the relationship amongst corporate productivity and the extent practicing company set of rules and mechanisms. The sample includes the top 100 companies in Malaysia (FTSE Bursa MY Top 100 Index), registered in the Bursa MY, during 2009-2013 and because it is a comparative study, the final sample consisted of 84 companies. The statistical findings suggested that there is a correlation amongst corporate governance mechanisms and performance persistence, as measured by approximate ROA.

Keywords

References

  • CLARKE, T. 2004. Theories of Corporate Governance: The Theoretical Foundations.
  • GIBSON, M. S. 2003. Is corporate governance ineffective in emerging markets? Journal of financial and quantitative analysis, 38, 231-250.
  • MITTON, T. 2002. A cross-firm analysis of the impact of corporate governance on the East Asian financial crisis. Journal of financial economics, 64, 215-241.
  • HOLROYD, C. B. & COLES, M. G. 2002. The neural basis of human error processing: reinforcement learning, dopamine, and the error-related negativity. Psychological review, 109, 679.
  • ALNASSER, S. 2012. What has changed? The development of corporate governance in Malaysia. The Journal of Risk Finance, 13, 269-276.
  • NESTOR, S. & THOMPSON, J. 2001. Corporate governance patterns in OECD economies: Is convergence under way. Corporate governance in Asia: A comparative perspective, 19-43.
  • Mardnly, Z., Mouselli, S. and Abdulraouf, R. (2018), “Corporate governance and firm performance: an empirical evidence from Syria”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 11 No. 4, pp,591-607.
  • Kao, M.F., Hodgkinson, L. and Jaafar, A. (2019), “Ownership structure, board of directors and firm performance: evidence from Taiwan”, Corporate Governance, Vol. 19 No. 1, pp. 189-216.
  • Ghazali, N. A. M. (2020). Governance and ownership in Malaysia: their impacts on corporate performance. Asian Journal of Accounting Research.
  • Bhatt, P. R., & Bhatt, R. R. (2017). Corporate governance and firm performance in Malaysia. Corporate Governance: The international journal of business in society.
  • Jamaludin, M. F., Abdul Rahman, A. F., Abdul Hamid, N. H., Hashim, F., & Nik Abdul Majid, W. Z. (2018). Corporate Governance and Firm Performance in Malaysia. Corporate Governance and Firm Performance in Malaysia (April 10, 2018).
  • Jamil, A., Ghazali, N. A. M., & Nelson, S. P. (2020). The influence of corporate governance structure on sustainability reporting in Malaysia. Social Responsibility Journal.
  • Aguilera, R. V., Judge, W. Q., & Terjesen, S. A. (2018). Corporate governance deviance. Academy of Management Review, 43(1), 87-109.
  • Ciftci, I., Tatoglu, E., Wood, G., Demirbag, M., & Zaim, S. (2019). Corporate governance and firm performance in emerging markets: Evidence from Turkey. International Business Review, 28(1), 90-103.

 

Files

Share

How to cite

Statistics