Corporate Governance and Firm Performance

Abstract

This study focuses on the impact of good corporate governance mechanism and Malaysian Code of Corporate Governance (MCCG) on corporate performance in Malaysia listed companies. Data are obtained from the top 100 constituent firms which comprised the FTSE Bursa Malaysia Index as of 2009, for the years ending 2007 to 2009. This study finds a significant positive result for the association of independent Chairman with ROA and ROE. Although contradictory to the prediction of the agency theory, the results show that a higher proportion of independent non-Executive Directors are negatively associated with the firm"s performances. The result of this study indicates that an elected independent chairman is an important factor for a company"s financial performance as well as an important aspect to attract social investors and consequently will increase shareholder"s wealth.