The study investigates the interrelationship between executive compensation, earnings management and over investment. Using a sample of 196 Malaysian public listed firms, the findings show a positive endogenous relationship between executive compensation and over investment. Measuring equity compensation in incentive ratio, for each percent of over investment, one percent improvement in share prices will increase 23% of executive directors' equity value. Over investment, however, leads to a decline in executive directors' equity value in large shareholders controlled firms. In addition, one percent of over investment can explain 12% of earnings management. Nevertheless, earnings management does not explain executive directors' compensation. In summary, aligning over-investment with executive compensation schemes has implied that the existing compensation is insufficient for executive directors to align their interest with the objective to maximise shareholders' value.

The paper examines the determinants of ownership structure characteristics of the 147 firms listed on main board of the Kuala Lumpur Stock Exchange (KLSE). Three dimensions of governance issues in firm theory:- asymmetric information, agency conflicts and risk as discussed in Putterman (1993) are used to assess the effects of ownership concentration. Ownership concentration is divided into dispersed, dominant minority, and majority controlled firms, while ownership identities are classified as family controlled, conglomerate, others institution, state, foreign and dispersed firms in explaining the above determinants of firm’s ownership. With the exception of leverage and year effects, we prove that ownership structure is able to extract cost and benefits from governance structure. We further provide evidence that ownership identities influence asymmetric information and risk

Ahstract-This study aims to investigate the determinants that caused the variations in the post-CBMA performance of the target firms in the five East Asian countries, namely Malaysia, Thailand, Indonesia, the Philippines and South Korea. Using a sample from 1998 to 2004, the ownership and target firms' characteristics are examined. A four-step hierarchical analysis was used with EFCFS (Excess free cash flow per share) as a dependent variable for the post CBMA performance and independent variables including characteristics of targets (pre-CBMA) and ownership characteristics of the acquired (post-CBMA). The results show that the average EFCFS improved after CBMAs. The target characteristics such as pre-CBMA performance, the size of the targets, and the business relatedness between targets and acquirers have a significant effect on EFCFS.The positive effect of foreign majority control on post CBMA performance nevertheless is contingent on the target characteristics ..

The hypothesis of financial constraints suggests that firms will be denied profitable investment dueto inaccessible to external capital markets as debt and equity financing are no longer perfectsubstitutions after firms utilize internal capital. In view of reduced investments during globalfinancial crisis in 2008-2009, the study investigates 157 firms, whether they face the issues offinancial constraints in Malaysia. In general, non-family firms rely heavily on the external debtmarket while family controlled firms utilizing internal cash and reducing their dependence on debtmarket for their investments, confirming financial constraints in family firms. However, thepresence of CEO duality does not exaggerate the problem of financial constraints, but rather leadsfamily firms to become stagnant in their investments. Independent directors appear to beineffective in governing family firms in issuing finances for investment. Apparently, their presencein family firms reduces firms’ investment opportunities either through internal cash and externaldebt financing, which could reduce shareholders’ value in the long-term.Keywords: Investments; Financial Constraints; Corporate Governance; Duality; IndependentDirector; Family Controlled firms.

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