Board of directors and corporate diversification in Malaysia

Ishak, Zuaini; Manaf, Nor Aziah Abdul

doi:10.1504/ijca.2013.055179

Cited by 14 publications

(16 citation statements)

References 61 publications

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“…Corporate ownership in East Asian countries is concentrated in large controlling shareholders, specifically, the family and the individual (Ishak & Napier 2006). Based on prior argument, family ownership may have a positive or negative effect on the company (Choi, Park & Yoo 2007).…”

Section: Family Ownershipmentioning

confidence: 99%

Factors Associated with Financial Restatements: Evidence from Malaysia

Hasnan¹,

Hussain

2015

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This study examines seven factors associated with financial restatements in Malaysian publicly listed companies (PLCs). We hypothesize that two factors proxy for management rationalization, two for management motives and three for the opportunity to predict financial restatements. Our sample consists of 85 restatement firms and 85 no-restatement firms, listed on the Bursa Malaysia and have a complete set of data from 2005-2011. The objective of this study is to examine how rationalization, motive and weak governance lead to financial restatements in emerging economies, like Malaysia. With regard to rationalization, we find that founders are negatively and significantly associated with financial restatements while related party transactions (RPTs) are positively and significantly associated. Additionally, we find evidence that opportunity for restatement proxied by audit quality is negatively and significantly associated with financial restatements.

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Section: Family Ownershipmentioning

confidence: 99%

Factors Associated with Financial Restatements: Evidence from Malaysia

Hasnan¹,

Hussain

2015

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“…This study was conducted to exploit the features of the Malaysian equity market which is characterized by high levels of ownership concentration (Claessens, Djankov, & Lang, 2000). Generally, Malaysian cooperations evidence four main parts of ownership structures, namely family, governmentlinked, other types of corporate shareholders as well as widely held corporations (Ishak & Napier, 2006). This paper empirically investigated whether controlling shareholders' ownership concentration moderates the relationship between independent directors' tenure and firm value.…”

mentioning

confidence: 99%

Family firms, expropriation and firm value: Evidence of the role of independent directors’ tenure in Malaysia

Liew¹,

Alfan²,

Devi³

2017

IJOL

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Most corporate governance discussions center on traditional shareholder-manager problems or agency problem type I. These discussions typically assume that greater insider ownership leads to better corporate governance (Morck & Yeung, 2003) because managers who own large blocks of shares in their firms are less likely to take actions which reduce the value of their shares (Jensen & Meckling, 1976). This mitigation framework is certainly true in the most developed economies whereby ownership structures are very much diffuse (Morck & Yeung, 2003). However, this framework may not work in emerging markets where ownership structure is highly concentrated and most of them are family-controlled firms. The Review of Literature Corporate Governance Development and Regulatory Framework One of the major causes of post-1997 Asian financial crisis corporate governance was the reforms in the Malaysian Code on Corporate Governance (MCCG) which was established in 2000. The World Bank in its assessments on the observance of Corporate Governance codes in Malaysia since 2001 observed that Malaysia has faced several challenges in improving its corporate governance practices due to its institutional setting. It was highlighted that the government's level of equity ownership has remained large, whilst free float has remained low and directors' accountability and protection for minority shareholders were significantly low. Furthermore, the role of institutional investors and shareholder activism in the corporate governance framework were weak. According to World Bank reports during 2001 and 2005, the corporate governance landscape in Malaysia transformed significantly as firms enhanced their corporate governance systems. These initiatives made a difference when Malaysian firms with concentrated ownership produced better accounting results (Haniffa & Hudaib, 2006). After outlining the reports of World Bank in 2005 on the inadequacies of the corporate governance reforms, the code was revised in 2007. The Malaysian Code on Corporate Governance 2007 (MCCG 2007) emphasized on strengthening the board of directors and audit committees and ensuring that the board of directors and audit committees discharge their duties and responsibilities effectively. To sustain the corporate governance climate, the Securities Commission (SC) published the Corporate Governance Blueprint 2011 in 2011. This blueprint further focuses on the exercise of shareholder rights, role of institutional investors, board's role in governance, improving disclosure and transparency, role of gatekeepers and influencers, as well as public and private enforcement. To spearhead the Corporate Governance Blueprint 2011, the Securities Commission further revised the MCCG 2007 in 2012. The MCCG 2012 which supersedes the 2007 code, sets out principles, structures, and processes for companies' board so that the board could incorporate good corporate governance into their firms' business dealings and corporate culture. Despite the issuance of the MCCG in 2000, 2007, and 2012, these code...

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“…Ishak and Napier (2006) also reported significant diversification at around 55% for Malaysian PLCs in 2000. Similarly, recent study of Doaei et al (2014) also shows considerable level of international diversification for Malaysian companies.…”

Section: Malaysian Corporate Sector and Diversified Malaysian Plcsmentioning

confidence: 98%

Significance of Studying Product Diversification, Geographic Diversification, and Their Interaction Impacts for Malaysian Companies: A Literature Review

Hilman¹

2015

ASS

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The objective of this study was to comprehensively and critically review research literature on impacts of product diversification strategy and geographic diversification strategy, conducted particularly in Asian context, and set forth guidelines for future studies. The study concludes that past research into impacts of product diversification and geographic diversification produced indecisive results. There has also been absence of any consensus on the interaction impacts of the two strategies on corporate performance. Although past research studied the topic using variety of methodologies but there has been limited research on the topic for Asian economies compared to Western ones. This is especially true about Malaysian public listed companies (PLCs) for which, particularly, studies regarding interaction impacts of the two strategies are extremely limited. For Malaysia, the challenging business scenario in future coupled with quite significant number of diversified companies warrant research into these areas. Future research could take up the objective of analysing and understanding individual and interaction impacts of product diversification and geographic diversification on corporate performance of Malaysian companies and contribute significantly to this research field. It could adopt new and advanced methodologies for measuring diversification strategies as well as employ several measures of corporate performance to produce comprehensive and robust results. Findings of such research would certainly be useful for practicing managers, particularly Malaysian strategists, and guide them in their decisions concerning diversification strategies and help them better manage their companies' performance.

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Board of directors and corporate diversification in Malaysia

Cited by 14 publications

References 61 publications

Factors Associated with Financial Restatements: Evidence from Malaysia

Factors Associated with Financial Restatements: Evidence from Malaysia

Family firms, expropriation and firm value: Evidence of the role of independent directors’ tenure in Malaysia

Significance of Studying Product Diversification, Geographic Diversification, and Their Interaction Impacts for Malaysian Companies: A Literature Review

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