The Influence of Corporate Governance and Organizational Capacity on the Performance of Malaysian Listed Companies

Ifa Rizad Mustapa,Muslim Har Sani Mohamad,Nazli Anum Mohd. Ghazali

doi:10.5901/mjss.2015.v6n3s1p27

Abstract

This study assesses the association between corporate governance and performance of companies listed on Bursa Malaysia. Although there is no clear evidence in the literature indicating that organizational capacity is influencing corporate performance, this study further examines the influence of corporate governance by combining it with organizational capacity. This study employs mail questionnaire in assessing the performance of companies. Using the data from the mail questionnaire, no significant relationship was found between independent director, CEO duality, board size, ownership concentration, financial management and corporate performance. Additionally, findings from the mail questionnaire showed that organizational learning was significant in explaining corporate performance. Two contributions are acknowledged in this research. First, the application of a mail questionnaire extends the research methodology on corporate performance and adds value in respect of how findings from the questionnaires highlight the perceptions of individuals pertaining to the research objectives. Second, using organizational capacity as an explanatory factor, this study documents that organizational learning emerges as an important aspect in influencing the performance of Malaysian companies. DOI: 10.5901/mjss.2015.v6n3s1p27

Highlights

The requirement to comply with the Malaysian Code on Corporate Governance (MCCG) recommendations among public listed companies has become very important in Malaysia since its introduction in 2000, which stresses on accountability and transparency
After conducting the factor analysis, the organizational capacity elements and corporate performance variables have been factorised into three variables
The results of Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) for organizational capacity and corporate performance constructs were above the acceptance value which testifies that organizational capacity and corporate performance were constructively valid

Summary

Introduction

The requirement to comply with the Malaysian Code on Corporate Governance (MCCG) recommendations among public listed companies has become very important in Malaysia since its introduction in 2000, which stresses on accountability and transparency. In respect of organizational capacity, which is understood as developing the resources and capabilities of an organization that are valuable, rare, imperfectly imitable and non-substitutable, this study is interested in exploring the link between corporate governance and capabilities of a company. The aim of the current study was to establish the association between corporate governance practices and structures, as well as the elements of organizational capacity and the performance of Malaysian public listed companies. The first research objective is presumed to provide better investigation concerning the link between corporate governance and the performance of listed companies on Bursa Malaysia. The second research objective is to identify the organizational capacity features in explaining corporate performance using the existing theoretical framework initiated from prior studies in developed countries

Objectives

Methods

Results

Conclusion