The Relationship between Corporate Governance and Expropriation of Minority Shareholders’ Interests

Abstract

Abstract This study empirically examines the relationship between corporate governance and expropriation of minority shareholders’ interests Malaysian firms. Using a sample of 73 companies that are screened from the top 100 companies in Malaysia, this study runs multivariate analysis to assess whether minority shareholders’ interests are protected by corporate governance mechanism in a company. The results of this study shows that audit committee independence would help reduce the tunneling and/or propping activities in a company. Besides, a company is suggested to have its positions of CEO and Chairman being held by two different persons. In the analysis, this study also controls for several corporate governance variables such as board size as well as CEO's and/or Chairman's financial expertise. In summary, investors may refer to the outcome of this study in making their investments, whereby they are recommended to obtain some information on board mechanisms of a company.