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Dynamic predictions of financial distress of the firms have received less attention in finance literature rather than static prediction, specifically in Malaysia. This study, therefore, investigates dynamic symptoms of the financial distress event a few years before it happened to the firms by using neural network method. Cox Proportional Hazard regression models are used to estimate the survival probabilities of Malaysian PN17 and GN3 listed firms. Forecast accuracy is evaluated using receiver operating characteristics curve. From the findings, it shown that the independent directors’ ownership has negative association with the financial distress likelihood. In addition, this study modeled a mix of corporate financial distress predictors for Malaysian firms. The combination of financial and non-financial ratios which pressure-sensitive institutional ownership, independent director ownership, and Earnings Before Interest and Taxes to Total Asset shown a negative relationship with financial distress likelihood specifically one year before the firms being listed in PN 17 and GN 3 status. However, Retained Earnings to Total Asset, Interest Coverage, and Market Value of Debt have positive relationship with firm financial distress likelihood. These research findings also contribute to the policy implications to the Securities Commission and specifically to Bursa Malaysia. Furthermore, one of the initial goals in introducing the PN17 and GN3 status is to alleviate the information asymmetry between distressed firms, the regulators, and investors. Therefore, the regulator would be able to monitor effectively distressed firms, and investors can protect from imprudent investment.

Corporate social responsibility (CSR) is a concept that extends the traditional focus of business in achieving bottom-line results to triple bottom-line results and the concept of sustainability that focus on economic, environmental and social performance. The Bursa Malaysia CSR Framework (2006) defined CSR as open and transparent business practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders. This CSR framework was designed to deliver sustainable value to the society at large.

The chapter aims to examine the challenges and the opportunities for the development of Islamic stockbroking in Malaysia.

The chapter adopts library research to discuss the concept of Islamic stockbroking. It also employs a semi-structured interview with industry players to prognosticate the future development of Islamic stockbroking in Malaysia.

The study concludes that the future of Islamic stockbroking in Malaysia is very promising, triggered by drivers on both the supply side and the demand side. The large Muslim population, wealth and economic growth are among the key factors for the development of Islamic stockbroking from the demand side. On the other hand, the Shari’ah compliance of 89% of Malaysian stocks, Malaysia’s position as an Islamic finance hub and the natural progression of Islamic finance are all factors underpinning the future of Islamic stockbroking from the supply side. However, lack of qualified human resources, political inconsistency, information technology infrastructure, product innovation as well as public perception are obstacles to its development.

This chapter will add new literature in contemporary Islamic finance, as not many studies have been done on the subject.

Purpose – The purpose of this study is to examine the impact of corporate governance characteristics on audit report timeliness in Malaysia. The corporate governance characteristics examined are board independence, audit committee size, audit committee meetings and audit committee members' qualifications.

Design/Methodology/Approach – The sample comprises of 703 Malaysian listed companies from Bursa Malaysia, for the year 2009. It excludes companies from the finance-related sector as they operate under a highly regulated regime under supervision by the Central Bank of Malaysia. Further, regression analysis was performed to examine the audit report timeliness determinants.

Findings – Results show that audit report timeliness is influenced by audit committee size, auditor type, audit opinion and firm profitability. However, no association was found between board independence, audit committee meetings, audit committee members' qualifications and audit report timeliness.

Research limitations/Implications – It is a cross-sectional study of the year 2009. Practical implications for policy makers are consideration of the minimum submission period for audit reports Regulators' support for firms to have larger audit committee sizes is also discussed.

Originality/Value – The study investigates the impact of corporate governance on audit timeliness in light of the recent amendments to the Malaysian Code of Corporate Governance made in 2007.

This chapter examines herd behavior across national borders. A dynamic latent factor model with Gibbs sampling is used to decompose the national herd behavior into the world, regional, and country-specific components. Testing the daily data from 2000 through 2014 for 47 countries, we find that the impact of world factor on national herd behavior is short-lived. This study indicates that world and regional factors play a significant role in explaining the variations of national herd behavior, constituting 33% of the herding variability. The significance of world and regional components is likely to produce a biased herding estimator.

Purpose – A study of Islamic banking products, especially bay’ al-tawarruq transactions, demonstrates that the purpose of these transactions is to provide liquidity to the customer, such as personal financing, working capital expenditure, cash lines and credit cards. However, as the industry expands, the industry is innovating to extend products to include an investment and deposit instrument that provides a fixed return to the customer. As the second fully-fledged Islamic bank in Malaysia, Bank Muamalat Malaysia Berhad (BMMB) offers products based on the bay’ al-tawarruq concept.

Methodology/approach – This study investigates the original principles of the bay’ al-tawarruq contract and its current applications in BMMB.

Findings – The study found that the bay’ al-tawarruq contract is being adopted as an alternative to the bay’ al-‘inah contract, especially for financing-based products offered by BMMB.

Originality/value – This is an attempt to study the application of Tawarruq contract in Bank Muamalat’s product offerings based on the process and mechanism of Bursa Suq al-Sila’ (BSAS).

Exchange traded funds (ETFs) are one of the most innovative financial products listed on exchanges. As reflected by the size of the market, they have become popular among both retail and institutional investors. The original ETFs were simple and easy to understand; however, recent products, such as leveraged, inverse, and synthetic ETFs, are more complex and have additional dimensions of risk. The additional risks, complexity, and reduced transparency have resulted in heightened attention by regulators. This chapter aims to increase understanding of how ETFs function in the market and can potentially impact financial stability and market volatility.

We discuss the evolution of ETFs, growing regulatory concerns, and the various responses to these concerns.

We find that concerns related to systemic risk and excess volatility, suitability for retail investors, lack of transparency and liquidity, securities lending and counterparty exposure are being addressed by both market participants and policy makers. There has been a shift toward multiple counterparties, overcollateralization, disclosure of collateral holdings and index holdings.

The analysis contained in this chapter provides an understanding of the role of ETFs in the financial markets and the global economy that should be valuable to market participants, investors, and policy makers.

The principles of sustainable development argue that organizations should make decisions not only based on economic or financial factors but also based on the long-term social and environmental consequences. The Code on Corporate Governance is one of the drivers for corporate social responsibility (CSR) reporting in Malaysia. Additionally, the way managers execute their responsibilities may be affected by their own tradition, beliefs, values, and culture. Thus, this chapter aims to examine the relationship between corporate governance characteristics and CSR disclosure and to investigate the influence of cultural values (Board’s Culture Domination) on the relationship between corporate governance and corporate social responsibility. A sample of 150 companies from the main board of Bursa Malaysia for year ended 2006 are chosen for the purpose of this study due to the year of the introduction of Bursa Malaysia CSR Framework. Based on available data, a CSR index is constructed. Hierarchical regression analysis is used to examine the relationship between the CSR disclosure index and the independent variables and also the moderating effect of Board’s Culture Domination. Results show that government ownership and audit committees have a positive and significant influence on CSR disclosure. Furthermore, the findings show that the Board’s Culture Domination moderate the relationship between audit committee, number of shareholders, foreign ownership, and CSR disclosure.

This chapter investigates the relationship between related party transactions (RPTs), corporate governance, and firm performance. Specifically, this chapters examines the moderating effect of corporate governance on the RPTs–performance relationship. On the basis of 448 firm-year sample for 2005–2007, we find evidence that related transactions are detrimental to shareholders and thus reducing firm performance. However, the negative effect is mitigated with the presence of good governance, namely level of board independence and executive remuneration. Furthermore, we find auditor size as an external governance mechanism could also reduce the negative impact of RPTs.

This chapter examines the relationship between corporate governance and agency costs of family and non-family ownership of public listed companies in Malaysia. It presents a longitudinal study of the 290 publicly listed companies in the Main Board of the Bursa Malaysia over the period 1999–2005.The study applies the governance mechanisms such as board size, independent director and duality as a tool in monitoring agency costs based on asset utilization ratio and expense ratio as proxy for agency costs. There is strong evidence that larger board size has a significant effect as a device in mitigating agency costs. The study supports that independent directors and duality are viewed differently by family and non-family ownership. The evidence shows that an independent director in family ownership does not influence agency costs. But non-family ownership needs more independent directors to counsel and monitor the company and thus reducing the agency conflict with shareholders. The study also finds that family ownership experiences less agency conflicts when duality role exists. Contrary, non family ownership experiences high agency costs when duality exists on board.