Relationship between corporate governance and economic value added (EVA): Evidence from public listed companies in Sarawak
Financial scandals and collapses oflarge and established firms have become the impetus for better corporate governance. Prior studies have shown that good corporate governance plays a significant role in attracting local and foreign investments since a sound corporate governance system can help t...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
| Published: |
2013
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/14345/1/Abdullah%20Al%20Mamun%20ft.pdf |
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| Summary: | Financial scandals and collapses oflarge and established firms have become
the impetus for better corporate governance. Prior studies have shown that good
corporate governance plays a significant role in attracting local and foreign
investments since a sound corporate governance system can help to enhance firm
performance)
Although there have been several studies conducted on corporate governance
and firm performance, there are very limited researches conducted on the effect of
corporate governance on the firms' true economic profit, measured in term ofEVA
(economic value added), a value-based measurement tool. Thus, the purpose of this
study is to investigate the relationship between corporate governance and the
economic profit of 25 public listed companies in Malaysia. A series of multiple
regression analyses were employed to investigate the extent to which corporate
governance influences on firm performance.
The results explained that not all the mechanisms had direct effect on firm
performance. Chief executive officer (CEO) non-duality, audit committee
independence, and audit committee meeting frequency appeared to have no effect on
firm performance, while board size and board independence had significant
relationship with firm performance. Various regulatory bodies should concern the
independent board members, with their knowledge and expertise can elevate firm
performance as well as the practice ofbetter corporate governance in Malaysia. The scope of the study was limited to Sarawak-based firms listed on Bursa
Malaysia and relied on secondary data. Due to missing data, the study could not
assess and analyse the effect ofresignation or retirement ofspecific director, CEO, or
audit committee members on EVA. Hence, this study recommends that such
information, together with the number of meetings held over the year by audit
committee members and board ofdirectors, to be included in future studies. It might
be true for a larger sample as well to investigate the effect ofcorporate governance
onfirm performance in term ofEVA in Malaysia. |
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