A study on impact of the implementation Malaysian code of corporate governance 2012 on firm performance : a case study of shariah compliance public listed companies in Malaysia

Abstract

Corporate governance has important implications for boosting the growth potential of Shariah-Compliance Public Listed Companies in the economic ecosystem. A good corporate governance mechanism is seen as significant not only to minimize risk to investors, but also to safeguard shareholders' values as well as to enhance a firm's general performance. Nevertheless,corporate governance apparatuses do differ between nations, as each country differs in its economic, political,rules and regulation,tradition, as well as social contexts. Every country has its own rules of corporate governance in various aspects of business management. In Malaysia, the Securities Commission tries to formulate an excellent corporate governance structure starting from the Malaysian Code of Corporate Governance (MCCG) 2000 and revised in 2007. Furthermore, the new Code of Corporate Governance had been introduced in 2012 focusing on strengthening the composition and the structures of Board Directors. After certain period, the Malaysian Authority introduced the brand new MCCG 2017 guidelines to enhance the company's performance improvement. This research tries to dissolve the effectiveness of some of the structures proposed in MCCG 2012 prior to the implementation of the new MCCG 2017 by using a complete cycle of data for 3 years. The results obtained from the Shariah Compliance public listed companies corporate governance code of practices on the firm's performance, were reviewed in this research. Secondary, data were obtained from companies' annual financial report to examine whether the corporate governance investigated in this particular study is the size of Board of Directors, the frequency of board meetings, the independence of the board, duality , the number of appointments of women directors, and also the ownership structure of the company. Agency theory, Stewardship theory, as well as views from Islamic perspectives have been utilized as the basis of research theory. The uni variate and multivariate analysis shows diverse results in the corporate governance analysis of companies' performance. Final result show that the frequencies of board meeting has a significant relationship with the companies' performance while the number of women on the board of directors shows inconsistent results. In addition, this study found that, other corporate governance variable factors have a positive relationship with company performance.