All Research

Nurul Hizetie Mohamed Nor · Anuar Nawawi · Ahmad Saiful Azlin Puteh Salin ·Pertanika Journal of Social Science and Humanities ·2018

The purpose of this study is to examine the relationship between audit characteristics and firm investment efficiency level. Audit characteristics have been characterized using audit committee (AC) independence and external auditor choice. Top 200 Malaysian listed companies based on market capitalization were selected as a sample. Binomial logistic regression analysis was employed to test the hypotheses for 3 years, that is, 2009, 2010, and 2011. The statistical results show no relationship between AC independence and investment inefficiency, while auditor choice was shown to be positively significant only in 1 year of the study, but was not significant in the other 2 years of study. The results provide further confirmation of the role of corporate governance in enhancing the investment performance of the company. This study provides an indicator to shareholders and investors that a company with strong governance structure will likely make better investment decision. Managers under strong governance are prevented from taking an aggressive investment risk approach that may result in overinvestment. In addition, the company will carefully plan to have an adequate capital so that a good opportunity investment will not being passed due to insufficient financing that will result underinvestment. This study is original, as it focuses on the direct relationship between corporate governance mechanism and firm investment efficiency level that is scarce in the literature, with a special focus on emerging markets in the process of developing their best governance practices.

Mohd Yassir Jaafar · Anuar Nawawi · Ahmad Saiful Azlin Puteh Salin ·Pertanika Journal of Social Science and Humanities ·2019

This study is intended to examine the levels of directors’ remuneration disclosure among public-listed companies in Malaysia. It further aims to examine the relationship among total directors’ remuneration, directors’ education level, size of external auditors, and proportion of managerial ownership and directors’ remuneration disclosure. The analysis is conducted based on three models, which are constructed from the Malaysian Code on Corporate Governance (Model 1), Global Practices (Model 2), and a combination of both Malaysian Code on Corporate Governance and Global Practices (Model 3). This study found that the size of external auditors had a positive significant relationship, while the proportion of managerial ownership had a negative significant relationship with the disclosure. This study contributes to the improvement of policymaking and body of knowledge by highlighting the relationship between the selected corporate governance characteristics and directors’ remuneration disclosure in the context of Malaysia.

Ai-Xin Lee · Chee-Wooi Hooy ·Malaysian Journal of Economic Studies ·2020 ·JEL: G21, G28, G32

This paper examines the relationship between state ownership and banks’ risk-taking in nine Asian emerging markets for the period 2009 to 2017. The finding shows that state-owned banks are associated with higher risk-taking in terms of credit risk and return volatility. In addition, we investigate the effect of corporate governance (CG) mechanism with monitoring committee, board independence and gender diversity on state-owned banks’ risk-taking. We find that the presence of monitoring committee on board has a reducing effect on state-owned banks’ risk-taking. We further argue that independent directors help to reduce banks’ risk-taking where their supervision should be robust enough even if there is huge government intervention. Nonetheless, we do not find strong evidence on the role of female directors. In a nutshell, board functions play a crucial role in monitoring and supervising banks’ investment decisions to prevent excessive risk-taking from the government, which is relatively important in the context of Asian emerging markets.

Fairus Halizam A Hamzah · Nadiah Abd Hamid · Siti Noor Hayati Mohamed Zawawi · Rohayu Yusup · Norazah Md Azali ·Malaysian Journal of Economic Studies ·2020 ·JEL: G3, M42, E62, H32, E62

The Inland Revenue Board of Malaysia (IRBM) provides a monitoring mechanism of corporate governance through tax audits. However, indicators associated with the tax authority monitoring system remain underexplored due to data confidentiality. This study aims to examine the indicators used by the tax authority in performing tax monitoring where the tax return data of firms that claim reinvestment allowance (RA) were employed alongside the historical audit data of corporate taxpayers of both a tax-monitored firm and an unmonitored tax firm. The results of the analysis reported that the tax authority monitoring system is closely associated with fundamental details disclosed in the tax return namely, assessment year, profitability, scale of operation, firm directorship, tax consultancy and industry type. In contrast, the incidents of tax avoidance and incentive utilisation indicators were not prominent in tax authority monitoring. The investigation of firms that experienced tax monitoring provides insight into indicators which interest tax authorities when it comes to a firm’s tax audit. This research revealed new evidence on IBRM preferred indicators in conducting tax monitoring.

Swee-Sim Foong · Jiunn-Shyan Khong · Boon-Leong Lim ·Malaysian Journal of Economic Studies ·2021 ·JEL: G32, G34

This paper examines the risk taking behaviour of Chinese CEO. Our analysis is based on a sample of 362 family firms in Malaysia over the 2009-2015 period using panel GMM methodology. Firstly, our results offer evidence that Chinese CEOs are risk taking. We then examine how CEO power, in the context of Finkelstein’s (1992) structural power, ownership power, expert power and prestige power, might drive risk taking of Chinese CEOs. The results are rather mixed where greater ownership power is likely to promote higher risk taking but greater expert power resulted in lower risk taking. We further show that corporate governance can mitigate risk taking of Chinese CEO in family firms. When the proportions of independent directors and foreign institutional shareholdings exceed the median thresholds of 40% and 5%, respectively, we find that CEO risk taking behaviour turns from positive to negative. Stronger evidence is found when we adjust the thresholds to the 75th percentile of 50% and 15%, respectively. The result is also robust with the use of leverage as a measure for CEO risk taking.

Sitraselvi Chandren · Ayoib Che Ahmad · Zaimah Abdullah ·International Journal of Supply Chain Management ·2018

The purpose of this conceptual paper is to address the link between corporate governance and operating performance during and after GST implementation. With the support of agency theory, this paper develops five propositions for the relationship between corporate governance and operating performance (sales growth and current ratio) during and after GST implementation. The nature of their relationship shall contribute to all stakeholders on the impact of corporate governance to operating performance. This displays on the governance effectiveness in discharging their roles to strengthen operating performance particularly during a new financial or tax policy implementation that requires necessary changes in business processes. It uncovers the transparency of Malaysian corporate governance commitment and acceptance to GST for firm and country sustainable development. In sum, for business friendly GST requires effective governance to support the firm operating system.

Jayalakshmy Ramachandran · Khoo Kok Chen · Ramaiyer Subramanian · Ken Kyid Yeoh · Kok Wei Khong ·Managerial Auditing Journal ·2018

Purpose This study aims to investigate the relationship between corporate governance (CG) and performance of Real Estate Investment Trust (REITs) in Singapore and Malaysia. Design/methodology/approach The CG attributes that contribute best toward R-Index scores are tested followed by analysis of whether R-Index scores contribute toward better performance of the REITs when controlled for growth, firm size and leverage. Regression analysis using structured equation modeling (SEM) is instituted. Findings All attributes in the R-Index except management ownership are significantly correlated to R-Index. Regression analysis using SEM reveals that all the three measures of performance are significant. When controlled for growth and firm size, CG mechanisms reduce the impact of losses. However, highly levered firms could be risky for investors despite strong CG mechanisms. Research limitations/implications All S-REITs and M-REIT sampled were grouped as one regardless of the country differences, which may have limited the results and findings. The R-Index used to score the CG practices for Asia is still very new. Practical implications Findings of the study will help REIT policymakers to update scorecards frequently. Loss-making REITs must emphasize on specific CG attributes to enhance their overall CG scores to gain market confidence and procure financial assistance through better disclosure. Originality/value Due to research scarcity on CG effectiveness associated with performance of Asian REITs after the global financial crisis, this study comes as a timely contribution in understanding the relationship between CG and performance of REITs.

Khanifah Khanifah · Pancawati Hardiningsih · Asri Darmaryantiko · Iryantika Iryantik · Udin Udin ·Journal of Asian Finance, Economics and Business ·2020 ·JEL: E44, M14, Q56

A series of corporate failures and financial crises have raised attention to organizational governance issues, especially for financial institutions. In the banking system, corporate governance further plays a unique role because of the uniqueness of the banking organizations. Therefore, this study aims to examine the effect of corporate governance disclosure on bank performance by building a corporate governance disclosure index (CGDI) for 10 Islamic banks operating in Iran, Saudi Arabia and Malaysia. The data used in this study are secondary data taken from annual reports and sourced from the official websites of each banks include Iran Exchange, Stock Market Quotes and Financial News, and Bursa Malaysia. This study uses content analysis of the annual bank report within five years (2014-2018). The results show that Islamic banks comply with 72.4% of the attributes discussed in the CGDI. The most frequently reported and disclosed elements are board structure and audit committee. The regression results provide evidence that Islamic banks with a higher level of corporate governance disclosure reported high operating performance measured by ROA. In contrast to the expectation, the financial performance of ROE and Tobins'q are not significantly related to the disclosure of sharia bank governance.