Board Mechanisms and Malaysian Family Companies’ Performance

The Role of Internal and External Corporate Governance Mechanisms on Firm’s Financial Performance in Malaysia

“…The results also indicate that even if the non-executive directors were a majority on the board, they had not significantly influenced ROE, signifying the lack of independence which is expected of them (Chang, 2008). The presence of non-executive directors was merely likely to fulfil the requirements of the Malaysian Code on corporate governance and this finding is similar to a study by Amran and Ahmad (2011).…”

“…In terms of leadership structure (H1b), it was found that CEO duality performed as predicted by the hypothesis and this finding is similar to that of a Malaysian study by Amran and Ahmad (2011). The estimated coefficient for this variable (CEOCHAR) is 0.521.…”

“…higher than the sample of Amran and Ahmad (2011) with the percentage of duality being only 10%. However, it is similar to a study by Haniffa and Hudaib (2006) whereby the percentage is 30%.…”

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“…The evidence on the impact of capital structure on profitability provides mixed information. The positive impact of debt financing on a firm's profitability was found in the studies of Amran and Ahmad (2011);Ting and Lean (2011). However, some studies (Hamid et al, 2015) agreed on pecking order theory which states that there is a significant negative association of debt financing with firm performance.…”

Performance of Family Business in Malaysia

“…Malaysia" family businesses make up about 70% of the listed firms and contribute tremendously to GDP (Amran and Ahmad, 2010). They are often small in size (Set, 2013), mostly owned by Chinese (Amran and Ahmad, 2011;Abdullah et al, 2015). Historically, these companies evolved from traditional family-owned enterprises and prefer to follow culture and management style of the business founder with not much openness western business practices and modern management skills (Nee, 2007).…”