Corporate governance in Malaysia: has MCCG made a difference

Abstract

Purpose

The purpose of this paper is to study the effect of Malaysian Code on Corporate Governance (MCCG) on the performance of the listed companies in Malaysia.

Design/methodology/approach

Panel data estimation techniques were used to run the regression in this study, following Baltagi (1995). The authors have selected 116 listed companies to Bursa Malaysia during the period 1996-2014, to study the effect of corporate governance on firm performance. Listed companies in Malaysia are mandatory to comply with MCCG rules and regulations.

Findings

It was found that there was a significant improvement in the performance of listed companies after Malaysian Government’s implementation of MCCG (2000) which means that MCCG matters for firm performance in Malaysia. It was also found that there was no significance difference in the overall impact of implementation of MCCG on performance level between government-linked companies (GLCs) and private companies (PCs).

Research limitations/implications

The authors have selected only 116 listed companies to Bursa Malaysia during the period 1996-2014, to study the effect of corporate governance on firm performance. The selection of the data was based on the availability of data in Thomson data stream.

Originality/value

The findings had contributed to the understanding that the MCCG has improved significantly the performance of listed companies in Malaysia.

Citation

Bhatt, P.R. (2016), "Corporate governance in Malaysia: has MCCG made a difference", International Journal of Law and Management, Vol. 58 No. 4, pp. 403-415. https://doi.org/10.1108/IJLMA-06-2015-0032