Malaysian Corporate Finance and Governance Behavior (Gelagat Kewangan dan Tadbir Urus Syarikat Malaysia)

Fauzias Mat Nor, Ruzita Abdul Rahim, Norazlan Alias, Mohd Hasimi Yaacob

Abstract


This study analyzes the performance of 361 non-financial public firms that are listed on Bursa Malaysia during a relatively tranquil period from 2002 until 2007. The objective is to identify the corporate finance and governance practices that contribute to firm performance. In this study, performance is measured using Tobin’s Q. The results from a fixed-effect panel data regression on 2,166 yearly-firm observations show four significant explanatory factors; leverage, dividend per share, CEO duality and Board size. The results imply that firms are more likely to perform if they employ more debt, pay higher dividend per share, hire different individuals to assume the two most important roles in the company and maintain a smaller number of directors. The four factors are then used to construct a model in which viability is proven if it can effectively differentiate the financial and governance characteristics of the high performers from the poor performers. The model seems more effective in predicting high performance, rather than low performance. High performance companies are therefore those that pay a much higher dividend per share and separate the roles of CEO and Board’s Chair. Debt ratio and Board size are less definitive in segregating the two groups of companies.


ABSTRAK
Kajian ini menganalisis prestasi 361 syarikat awam bukan kewangan yang tersenarai di Bursa Malaysia dalam satu tempoh ekonomi stabil dari tahun 2002 hingga 2007. Objektifnya adalah untuk mengenal pasti amalan kewangan dan tadbir urus korporat yang menyumbang kepada prestasi. Dalam kajian ini, prestasi syarikat diukur menggunakan nisbah Tobin Q. Hasil regresi data panel kesan tetap ke atas 2,166 cerapan tahunan-syarikat menunjukkan empat faktor penjelas adalah signifikan yakni leveraj, dividen se saham, dwi peranan CEO dan saiz Lembaga Pengarah. Hasil kajian menyarankan syarikat lebih berpeluang untuk meningkatkan prestasinya jika ia menggunakan lebih banyak hutang, membayar dividen se saham yang lebih tinggi, memastikan dua jawatan terpenting dalam syarikat dijawat oleh dua individu yang berbeza dan mengurangkan bilangan pengarah. Keempat-empat faktor yang signifikan tersebut seterusnya digunakan untuk membentuk satu model yang kemampuannya dibuktikan jika secara efektif ia mampu membezakan ciri-ciri kewangan dan tadbir urus syarikat berprestasi tinggi daripada yang berprestasi lemah. Model tersebut nyata lebih efektif untuk meramalkan prestasi tinggi berbanding rendah. Syarikat berprestasi tinggi jelas membayar dividen se saham yang jauh lebih tinggi dan mengasingkan jawatan CEO daripada Pengerusi Lembaga Pengarah. Nisbah hutang dan saiz Lembaga Pengarah kurang meyakinkan dalam membezakan antara dua kumpulan syarikat tersebut.


Keywords : Corporate Finance ; Governance Behavior


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