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The impact of the Malaysian code on corporate governance: compliance, institutional investors and stock performance

Wahab, Effiezal , How, Janice, & Verhoeven, Peter (2007) The impact of the Malaysian code on corporate governance: compliance, institutional investors and stock performance. Journal of Contemporary Accounting and Economics, 3(2), pp. 1-36.

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Abstract

In 2001, the Malaysian Code on Corporate Governance (MCCG) became an integral part of the Bursa Malaysia Listing Rules, which requires all listed firms to disclose the extent of compliance with the MCCG. Our panel analysis of 440 firms from 1999 to 2002 finds that corporate governance reform in Malaysia has been successful, with a significant improvement in governance practices. The relationship between ownership by the Employees Provident Fund (EPF) and corporate governance has strengthened during the period subsequent to the reform, in line with the lead role taken by the EPF in establishing the Minority Shareholders Watchdog Group. The implementation of MCCG has had a substantial effect on shareholders' wealth, increasing stock prices by an average of about 4.8%. Although there is no evidence that politically connected firms perform better, political connections do have a significantly negative effect on corporate governance, which is mitigated by institutional ownership.

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ID Code: 44459
Item Type: Journal Article
Keywords: Corporate governance, institutional investors, stock performance, political connection
ISSN: 1815-5669
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BANKING FINANCE AND INVESTMENT (150200)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Deposited On: 25 Aug 2011 08:11
Last Modified: 29 Feb 2012 23:43

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