Corporate governance disclosures and family firms' performance: The moderating role of ceo choice

Abstract

Mandatory imposition of Malaysian Code of Corporate Governance (MCCG) since 31st December 2012 seems to be associated with serious endeavours done by the regulators and policy makers to enhance the stakeholder's value for public listed companies in Bursa Malaysia. Family-controlled firms for the financial year of 2010 and 2011 were consecutively rated accordingly using the MCCG index scores issued by Minority Shareholders Watchdog Group 'MSWG'. The study reveals that CEO choice has moderating effects towards the relationship between disclosures of board of directors' structure and family-controlled firms' performance. These findings indicate that family firms' performance is found to be insignificantly related with CEO choice based on direct regression analysis. However, indirect effect has become significantly and positively related to firm's performance due to disclosures of MCCG interaction (i.e. board of directors' structure element) with CEO choice.Hence, significant relationships can be considered in the context of this specific governance element's impact on family firms' performance so that the high value creation can be given to investors by the inside CEO.