Analyzing the effect of Malaysian code of corporate governance adapted by construction firms in Malaysia

Abstract

There is a problem in construction industries of Malaysia. Despite abandoned project especially for housing is occurring as stated by Ministry of Urban Wellbeing, Housing and Local Government of Malaysia (KPKT) in year 2014. This problem has negatively impacted 17,468 purchasers because still can’t residence on that house. Thus, we construct the methodology that were used in our research to find the problematic issues indicated through regression analysis for firm profitability through 40 construction companies listed on Bursa Malaysia to find if there any relationship which causes the abandoned projects. However, the result from our research extracted show that Most of the hypothesis we’re rejected except one hypothesis which is the managerial ownership has positive relationship towards the profitability. However, there no single evidence that any variable could impact each variable in our prior study. As the further study suggestion, another possible factor influencing corporate profitability effectiveness could be the legal environment of a country. Malaysia has a low litigious environment as opposed to the USA and UK where shareholder protection is very good (La Porta et al., 1999). That may have some bearing on incentives to comply with regulatory requirements. In addition, the factors such as intervening from government should be considerable as future study variables because most of Malaysia government has political shares in particular companies such energy company.