Corporate Governance Practices and Firm Performance: Evidence from Top 100 Public Listed Companies in Malaysia

Abstract

Abstract Corporate governance practices have been a concerned issue by many Asian countries after the Asian Financial Crisis in 1997 including Malaysia. Due to the crisis, Malaysian Code of Corporate Governance (MCCG) has been introduced as part of the Bursa Malaysia (BMB) listing rules. This study hence focuses on corporate governance practices among Top 100 public listed companies in Bursa Malaysia and the relationship between corporate governance practices with firm performance. Two corporate governance's indicators (Board size and Board Independence) were chosen in testing the hypothesized relationship between corporate governance practices with firm performance, which was measured by return on asset (ROA) and return on equity (ROE). Descriptive and correlation analysis were used to examine the hypotheses in this study. The result showed that board size has significantly weak negative relationship with ROA but it was found to be insignificant to ROE. The other finding indicated that there was no relationship between board independence and firm performance. This study provide useful information for policy makers or regulators in improving the corporate governance policies in the future and also helps in increasing understanding on the relationship between corporate governance practices and firm's performance.