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Corporate governance reform in Malaysia: Board size, independence and monitoring

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  • Germain, Laurent
  • Galy, Nadine
  • Lee, Wanling

Abstract

Boards of directors and corporate governance have gained much attention in recent years. Many reforms have been made, especially on board composition to ensure that boards of directors are effective, in order to improve corporate governance. The Malaysian Code on Corporate Governance codified the best practices of good governance and described optimal corporate governance structures. However, due to a different context for business practices and the nature of the business environment in emerging markets, we expect that the determinants of board structure will differ from those in developed markets. Our study investigates the determinants of board structure for Malaysian firms from 2000 to 2007. We also examine trends in corporate board structure and the level of compliance of boards of directors in Malaysia with the requirements of the Malaysian Code on Corporate Governance. Overall, we find that after an increase at the beginning of the study period, and then a decrease, board size remained globally stable over the period studied while board independence has shown an upward trend in recent years.

Suggested Citation

  • Germain, Laurent & Galy, Nadine & Lee, Wanling, 2014. "Corporate governance reform in Malaysia: Board size, independence and monitoring," Journal of Economics and Business, Elsevier, vol. 75(C), pages 126-162.
    • Handle: RePEc:eee:jebusi:v:75:y:2014:i:c:p:126-162
    DOI: 10.1016/j.jeconbus.2014.06.003
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    5. Nor Farizal Mohammed & Zuraidah Mohd Sanusi & Fahdah Sultan Alsudairi, 2017. "Corporate Governance and Malaysian Politics: Theoretical Framework for Accounting Quality," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 188-195.
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    More about this item

    Keywords

    Corporate governance; Board structure; Malaysian Code on Corporate Governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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