The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress

This study aims to examine the effect of the Malaysia Code of Corporate Governance (MCCG) compliance on the likelihood of financial distress among Malaysian industrial firms. Secondary data from Datastream and manually collected data from annual report disclosed in Bursa Malaysia for 78 listed firms...

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Main Author:	Mohd Akram, Wahi Anuar
Format:	Thesis
Language:	eng eng
Published:	2022
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/11133/1/Depositpermission_s825729.pdf https://etd.uum.edu.my/11133/2/s825729_01.pdf
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id	my-uum-etd.11133
record_format	uketd_dc
spelling	my-uum-etd.111332024-06-10T01:46:16Z The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress 2022 Mohd Akram, Wahi Anuar Kadir @ Shahar, Hanita School of Economics, Finance & Banking School of Economics, Finance & Banking HG Finance This study aims to examine the effect of the Malaysia Code of Corporate Governance (MCCG) compliance on the likelihood of financial distress among Malaysian industrial firms. Secondary data from Datastream and manually collected data from annual report disclosed in Bursa Malaysia for 78 listed firms under the industrial sector from 2017 to 2021 with a sample of 390 firm-year observations, are used to self-construct corporate governance index. Binary coding score is constructed to measure MCCG compliance in the Malaysia Corporate Governance Index (MCGI). Descriptive analysis, correlation analysis, regression model analysis on three models comprised of corporate governance element, mechanism, and self-constructed MCGI is used to examine the effectiveness of MCCG 2021 in mitigating financial distress on Malaysian PLCs. Using Binary Logistic Regression analysis, this study provides evidence that good corporate governance can also be achieved by adhering to the best practices proposed in MCCG 2021 as it positively reduces the likelihood of financial distress. MCCG 2021 provision is adequate for Malaysian firms to sustain their financial stability. This study enriches the literature on corporate governance by supporting that CG best practices reduce the level of financial distress in a listed firm. Interestingly, the appointment of senior independent directors, gender diversity, two-tier voting process elements, and risk management committees mechanism have negative significant relationship with the financial distress likelihood. These findings encourage listed companies in Malaysia to adhere to and implement good corporate governance practices guided by MCCG 2021, which has been proven to reduce the likelihood of financial difficulties and increase investor, regulatory, and stakeholder confidence. This research study is subject to several limitations. The observation period of the company year needs to be extended as this study involved only 35% of listed firms in the industrial sector in Malaysia. 2022 Thesis https://etd.uum.edu.my/11133/ https://etd.uum.edu.my/11133/1/Depositpermission_s825729.pdf text eng staffonly https://etd.uum.edu.my/11133/2/s825729_01.pdf text eng public other masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Kadir @ Shahar, Hanita
topic	HG Finance
spellingShingle	HG Finance Mohd Akram, Wahi Anuar The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
description	This study aims to examine the effect of the Malaysia Code of Corporate Governance (MCCG) compliance on the likelihood of financial distress among Malaysian industrial firms. Secondary data from Datastream and manually collected data from annual report disclosed in Bursa Malaysia for 78 listed firms under the industrial sector from 2017 to 2021 with a sample of 390 firm-year observations, are used to self-construct corporate governance index. Binary coding score is constructed to measure MCCG compliance in the Malaysia Corporate Governance Index (MCGI). Descriptive analysis, correlation analysis, regression model analysis on three models comprised of corporate governance element, mechanism, and self-constructed MCGI is used to examine the effectiveness of MCCG 2021 in mitigating financial distress on Malaysian PLCs. Using Binary Logistic Regression analysis, this study provides evidence that good corporate governance can also be achieved by adhering to the best practices proposed in MCCG 2021 as it positively reduces the likelihood of financial distress. MCCG 2021 provision is adequate for Malaysian firms to sustain their financial stability. This study enriches the literature on corporate governance by supporting that CG best practices reduce the level of financial distress in a listed firm. Interestingly, the appointment of senior independent directors, gender diversity, two-tier voting process elements, and risk management committees mechanism have negative significant relationship with the financial distress likelihood. These findings encourage listed companies in Malaysia to adhere to and implement good corporate governance practices guided by MCCG 2021, which has been proven to reduce the likelihood of financial difficulties and increase investor, regulatory, and stakeholder confidence. This research study is subject to several limitations. The observation period of the company year needs to be extended as this study involved only 35% of listed firms in the industrial sector in Malaysia.
format	Thesis
qualification_name	other
qualification_level	Master's degree
author	Mohd Akram, Wahi Anuar
author_facet	Mohd Akram, Wahi Anuar
author_sort	Mohd Akram, Wahi Anuar
title	The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
title_short	The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
title_full	The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
title_fullStr	The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
title_full_unstemmed	The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress
title_sort	effect of mccg compliance level on the likelihood of malaysian firm financial distress
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2022
url	https://etd.uum.edu.my/11133/1/Depositpermission_s825729.pdf https://etd.uum.edu.my/11133/2/s825729_01.pdf
_version_	1804888197829754880

The effect of MCCG compliance level on the likelihood of Malaysian firm financial distress

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