Abstract
Currently, the housing sector is one of the Malaysian government’s main concerns as it is continuously facing various problems. This sector is endlessly struggling with enormous difficulties that have caused negative implications to the industry’s performance. Since a well governed corporate governance is said to be associated with better company performance, a number of corporate governance mechanisms are being employed in this study so as to test on their impact on the firms’ performance. Independence of board of directors (BOD) and audit committee (AC) members, non-duality and frequency of board meetings held per annum are among the CG mechanisms tested in relation to the firms’ performance, Tobin’s Q. The three-year period (2013-2015) data is taken from the annual reports and Thomson Reuters Data stream for all the companies in the property industry in Bursa Malaysia. Number of board meetings, CEO/Chairman non-duality, Independence of BOD members. These empirical evidences from this study would enhance the importance of incorporating corporate governance mechanisms and international diversification in relation to organizational performance for property industry.
Highlights
The vast number of corporate scandals, such as Enron, Tyco and HealthSouth, have caused large scale of workers retrenchment, huge investment losses to the shareholders and have encouraged massive white collar crimes that led to enormous record-breaking bankruptcy filings (Solomon, 2010)
The results show that 72% of the samples apply non duality role for their Chairman, which indicate only 28% of the companies are served by the same person as for the Chairman and Chief Executive Officer (CEO)
This is in line with requirement of MCCG that requires the positions of Chairman and CEO should be held by different individuals, and the Chairman must be a non-executive member of the board
Summary
The vast number of corporate scandals, such as Enron, Tyco and HealthSouth, have caused large scale of workers retrenchment, huge investment losses to the shareholders and have encouraged massive white collar crimes that led to enormous record-breaking bankruptcy filings (Solomon, 2010). In such chaos business situations, engaging corporate governance mechanisms is of importance as a well-governed corporate governance is said to be associated with better firm performance Core et al (1999).
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