Corporate Governance Mechanisms, Succession Planning and Firm Performance: Evidence from Malaysian Family and Non-Family Controlled Companies

The combination of corporate governance mechanisms and family succession play an important role in enhancing companies' performance, and in ensuring that family companies are sustained for the next generation. This study investigates the effect of corporate governance mechanisms (board and ownership structure) and succession attributes with company performance among Malaysian listed companies. This study used the panel data approach, and 420 companies on Bursa Malaysia were included as the sample. The results explain that family-controlled companies have higher firm value than non-family controlled companies. However, not all elements of governance mechanisms are significant, and the effects differ between family-businesses and non-family businesses. The results indicate that larger board size and inclusion of professional directors (experts) enhance firm value, both for family and non-family controlled companies. Further analysis shows that family and non-family companies that practise dual leadership show higher company performance. In terms of ownership structure, managerial and family ownership were found to show a non-linear pattern (entrenchment-alignment-entrenchment) with firm performance. Findings also signify that family CEO, CEO with higher education background, young CEO's and second generation CEO's enhance greater company performance. Thus, regulators need to note the different corporate governance practices between family and non-family businesses, and to create a pool of independent directors with-experience and skills in enhancing better corporate governance in Malaysia

Board mechanisms and Malaysian Family Companies' Performance

Many overseas studies discussed the topic of corporate governance and performance in family companies, however, few studies have been conducted in Malaysia. The objective of this paper is to examine the board mechanisms and family companies’ performance using three performance indicators (Tobin’s Q, Earnings Per Share & Operating Cash Flow). The sample size is 189 family companies listed on Bursa Malaysia from 2003 to 2007. The findings from this study reveal that some of the board mechanisms influence family companies’ performance. This study evidenced that family companies with a large board size, low directors’ expertise and duality leadership contribute to higher family companies’ performance. However, this study found that the academic qualification of directors does not influence firm performance. Therefore, generally, regulators and investors need to be sensitive to the fact that family companies do have differences in corporate governance practices compared to non-family companies

Corporate governance mechanisms and company performance: Evidence from Malaysian companies

The aim of the paper is to examine the effect of corporate governance mechanisms on Malaysian firms’ performance. The sample size is 424 companies on Bursa Malaysia. The findings reveal that in terms of board governance mechanisms, family-controlled companies are shown to have smaller board size and practise duality leadership in running their businesses.In contrast,for non-family controlled companies, director’s qualification helps to enhance firm performance. Based on the findings, regulators and investors need to be aware that the corporate governance practised by family- controlled companies differs to that of non- family controlled companies

Board independence and accounting conservatism in Malaysian companies

This paper examines the relationship between board independence and accounting conservatism among Malaysian companies in year 2000 until 2012.What triggers the researchers to carry out this study is that studies found that the implementation of Malaysian Code of Corporate Governance to Malaysian companies has created a higher confidence level to investors and enhances the company's image.Further, one of the elements of good corporate governance is the board independence.However, few studies discuss on accounting conservatism. It is argued that accounting conservatism is an effective mechanism to address the agency problem.Based on the findings, interestingly, this study found that higher board independence does not align with higher conservatism.Instead, the independent non-executive directors do not actually have the power of ‘independence’, monitoring and advising the board of directors

Audit committees: How they affect financial reporting in Nigerian companies

This study examines whether audit committees are associated with improved financial reporting quality for a sample of Nigerian listed companies prior to and after a corporate governance code mandated new regulations for audit committees in 2003. Using a sample of 70 companies listed on the Nigerian Stock Exchange, this study uses archival data in the form of companies’ annual reports to measure the association between audit committees and improved financial reporting quality. Dechew and Dichev (2002)’s model was used to measure earnings as a proxy for financial reporting quality. The results indicate that formation of audit committees was positively associated with improved financial reporting quality.It was also found that audit committees having an independent chair and audit committee expertise were positively associated with financial reporting quality.Other audit committee characteristics examined were found to be insignificantly related to financial reporting quality

Financial ratios: A tool for conveying information and decision making

This paper aims(1) to examine the extent of financial ratio information communicated in the annual reports of Malaysian listed companies;(2) to examine the significant predictors influencing the extent of financial ratio communicated in the annual reports of Malaysian listed companies.The sample of study is companies selected from Top 100 companies on Bursa Malaysia for year 2011.The annual reports were gathered and the data were hand collected.A regression model measured the Extent Financial Ratio Disclosure (EFRD)using 10 mostly referred and cited financial ratios.Findings reveal that on average, the sample firms disclose 18.4% of selected financial ratios in their annual reports.For the corporate governance score (CGS), almost half of the members of the board of directors are independent.The average percentage of shareholding of 80.63% and implies that Malaysian shareholding is considered to be concentrated. 95% of the sample firms are profit-making firms and 94% of them were audited by BIG4 audit firms.The Net Asset Per Share (NAPS) ratio is among the popular ratios presented in the annual reports, where 73% of the sample firms provided this ratio.Return on equity (ROE) indicates the profit a company generates with the money shareholders have invested show a 33% disclosure level.Corporate Governance(CG) does have a positive relationship with EFRD. Higher numbers of independent directors increase the extent of the financial ratio disclosures.It explains that the role of independent directors as proposed in the MCCG actually works and it helps to add value to the quality of financial reporting

The characteristics of Malaysian companies' mission statement and its relationship with financial performance

This study focus on Malaysian public listed companies, viewing at the nature and role of mission statement and the relationship between key components of mission statement and firm performance. The study found that very few Malaysian companies concern on disclosing their mission statement. However, the disclosed mission statements contained almost all the key components that have been addressed in the literature. Besides that, the study also shows a consistent result with the previous study in term of ranking of key components by degree of important. Further, it was found that some of the key components are related to one or two companies' financial performance indicators. This study also reveals, to some extent, that companies who disclose their mission statements are significantly difference than those who do not, in terms of financial performance. Such situation was seemed to be in congruence with the signaling theory

Audit Committee Characteristics and Financial Reporting Quality: Evidence from Nigerian Listed Companies

This research examines whether audit committees characteristics are associated with an improved financial reporting quality. The sample of the study is the Nigerian listed companies for the year ended 2010. Data was gathered from annual reports and SBAInteractive. Findings show that there was a weak association between the characteristics of audit committee and improved financial reporting quality. The audit committee independence and expertise are found to significantly associate with improved financial reporting quality. Audit committee meets 4 to 5 times a year and audit committee size consists of 4 members. The result also shows that 70% of the sample firms employed Non-Big 4 auditors. These findings provide evidence on the mandatory audit committee requirement under the NSE listing rules on how the companies respond towards The Code

MUDIM Enterprise: Finding the right strategy

Despite Shaarani’s efforts in positioning MUDIM as one of the successful Small and Medium Enterprises (SMEs) in Malaysia, his mind was not at peace. He visualized many business opportunities and risks involved in managing MUDIM, such as sluggish economic environment in Malaysia, turbulent market demand and technological changes and various competitive forces in the industry.For instant, competition from other firms, such as Habhal, Jalel and Adabi, and the increase in prices of raw materials used as the main ingredients for MUDIM’s products, such as dried soy bean and chilli, could also badly affect the company’s profitability.As the owner and Managing Director of MUDIM, Sharaani believed that business sustainability was very much dependent on the ability of the business strategy.To stay competitive, Shaarani had started to think to develop and penetrate to new market

Boards mechanisms and Malaysia family companies' performance

Many overseas studies discussed the topic of corporate governance and performance in family companies, however, few studies have been conducted in Malaysia.The objective of this paper is to examine the board mechanisms and family companies performance using three performance indicators (Tobin's Q, Earnings Per Share & Operating Cash Flow).The sample size is 189 family companies listed on Bursa Malaysia from 2003 to 2007.The findings from this study reveal that some of the board mechanisms influence family companies' performance.This study evidenced that family companies with a large board size, low directors' expertise and duality leadership contribute to higher family companies' performance.However, this study found that the academic qualification of directors does not influence firm performance.Therefore, generally, regulators and investors need to be sensitive to the fact that family companies do have differences in corporate governance practices compared to non-family companies