Impact of corporate governance on performance, risk and disclosure

Full text

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Sheila Nu Nu Htay

Impact of Corporate

Governance on

Performance, Risk and

Disclosure

The Impact of Corporate Governance on

Performance, Risk and Disclosure: Panel Data

Analysis of Malaysian Listed Banks

ILAP~

LAMBERT

(2)

Sheila Nu Nu Htay

Impact of Corporate Governance on

Performance, Risk

and

Disclosure

The Impact of Corporate Governance on

Performance, Risk and Disclosure: Panel Data

Analysis of Malaysian Listed Banks

(3)

Impressum/lmprint (nur fur Deutschland/onlyfor Germany)

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Acknowkdgemer.ts,

CHAPTERI:',\TRODlCTlO,\

B.::ckgTi.nmd oftht:>Stuc~

\luti,'<ltion and ExpeClcdContri:)llllon dtll"Sud",

S':lJ?Cr:ndR~~...~:rct-:\1:;thod_ Stn:C1tT~ufthe D",crl3tion

CH ..,pTER 2: THERORETICAI. FRA:'IIEWORK

:.1 Introduction,

The-OTeIlcalFr2.:new(~rkof Corporatt'(.i0\-..:rr~w~T

2.2.1 !\13jor~lC'd1ani~:1h Of3Corporah..~ Go\~mar.ccSystt:nl

Bl'}.1rd ofDlr.-...~clor~and(\1rporat~ G<..'\.:rr:;lll"':C· AgencyThe-l,)r:."

Perspecti \c ._

::.:.1.1 Board1.(,"3dC'r~h:? Sln~l;ll~rl~ AgencyTh~of):P::rjr'L.:i..:t:\{." .. Blx:rdCo!nposition: AgC'r:c~Theory-P('rsp,:cll\~ 2.2.2.~ BoardSiz~:'--\g('n(:yTb~ory Persp~ctil.~. 2_::.~...:J. O\\-ncr~h~;3: ..-\g:~ncyTheoryPer":ip-:l"ll\~. 2_J Curn:n1D..:-\·~lor:l1cnh ofth..: Codes of Corporate G(nc-manc:C' ....

2,3.1 Intc-rr:atiQna~ [ffl.lr[~T-oward':!- BeLl.:rCorpllT3te(j\..n~manCl':-c 2.L"~ Corpor~lt.:Gln~rnanceIII\lal~~)-~~Lt

233 The\-1alay,i~nCode011C,'rporate Ge\crn"llCC

2,3,3.: Approach aco;:l1cd Lndert1~e\Ialay,ian Coce on CDrporate

Gon:rr..ance ..

:-_3 __~.2 Cont-i:ntsof the \bl~: ::':~l]~Cock onCorpor,-tlL..-~(10\~n12nce 2 A Other Theories ..

Risk and O;"clo,ure: \larket Di;cipEne Pcr'Jecti\e., ... 2.4,2 Rl,k and Perfor,nallcc:Clp;lal.\;,etl'ricil~g\lode1 fRi,k an':

Ren:m) Per,pecti\e" " "" " ... , ... y 9 11 14 14 1~ l~ 1< ::'0 20 _.'

:9

30 " I

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2.4.3 P~rfiJn11~1Ili:C ar.d Disclosure:S:gn~~LngTr.coryPerspecti\";,;. 2.:' Hi~lnrical D~\ .:J;Jpll~cntof HankingSeClor1n\b.:a~-~i~. 2.6 Summaryan(~Conclusion.,

CH.\PTlH 3: F1'\D1'\GS OF PRIOR HlSL\HCH

34

36

3.1 [nlrl'\.:uLtion,

3.: Empiric·al f.\ idenee of the Relationship between Corp,'rare Go\emance Elements

3.:.1 Board Leadership Stn:cn:re and Perti.,r:nanec. ~ ~.... Hoare Crm:p(1-iitiun andPt:rt()nl~3nce..

J.2.3 Board SizeandPC'rt~lnnance

3.:.4 0"nershp and PelfL1r:nance .

.1,,2.4.1 UrrectDf0\\neTshipandP~rt()nnance.

-'.:.·L'

Institutional C)\\ ncr,hp and Perfcr:nance .

39 40 41 41 42

!

4.~

3.3 Emp;r;e,,! [,:,kr:e<: of tf:e Rc:"tior>I::" bdween CorporateG<AC!L1IK: El::ncnh

I

and Ri'K . I44

3,3, l BoardSi/cand Risk .~..,.: Ownership ar:d RisK.

3.3.2.] Director Ch\n:rsr.ipwJR:sK .

3.'.::

Institutional Owr.ershi:1 ar.d RiSK ..

,~.~'.2.3 Blud..:owner~h:?andrisk

-'.4 Empiric'll E, ice",:e of tl:c Relat:cns!llp h:t\\:en C\lfporare Go\o:mam'c Lcmer:ts and Di:-.closure _.

3.41 Board leadersbp SlrLIcturC ami Disclosure .'.12 Board Composition and Di,cl'N,re .

.' A __~ Ro~rdSiz..: andDisc1o~ur(' . 3.4.4 O\\ncrsl:ip and Discl',>,.lrc .

3.4.4.1 Director O",ncr,hip and D:,c!osllre

2

44

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3A.-+.: Ir.~titutiOT:ill O\\ncr~hipar.df)lsL:iosl:re ...

3..t.·L' Block Ch\nership and Di,closarc . 3.5S'.1Il::1:aryand ConcbJsioll ..

CfhPTER.t: DE\TLOP,\tEYJ OF HYPOTllfSES .-\.\D RESE.\RCII

OF:SIG,\

.t.1 Introduction.

-I.: [)c\ek'pn:c'lll of Hypothe,c's

.:t.~.

t

D~\...~Jop~ll::nl ofHy?oth~s::~on Perfcmnat;ce .

+.2.2 Development ofHypDth('si..; on R:sh:

4-.2.3 O...n.:!U?1ll1'1lt ofHy;,othesisi..'nni~~lo~dre

4.3 R~sr:~rch f)l'~i~rr: -+.3,1 Sawpk

..t~_3 Dc\elor1ll~t:( ()f\IlKk'"

..L3.3.1 Regres:-illO !\lodd:-. for Pcrfonnance .

-I.J ..

L:

Regr",,,ion !\lode] for Risk 4.3.3.3 Regr~s~ion\lodi.?1 forD:sc1o~lIn:. -1.1,.-1 [)ata ar.d Com:sponding T",sts . -1.-1 Conc:usion.

CHAPTER 5:0\ T\\'\.-\L\SISA"O F1'\D1'\GS

5. I Introduction. ~.: Backgro·.tr:d of the Data

5.:' nl".'"lTipti\l:Stali~(~s Rt'su:t~.

5.'.1 Descripti\c Stati,t:c, R':'L:its f,'r Ind",p",noent Variables . .5.3.2 D.:s\:ri;1ti\"<:Sta(~ti('''' Ri.?~~Jlts t~xDcp('ndc-nt Var:ab:es

5J,: Dc:-.cri?ll\<:Statl~tlcs R~sll:hfur C\'mtro)Var:ab:~s' .5.4 Correbtior:arnongInd':;'\".T.ccntanc.Contro~\Yar12hks . 5.5 Stat:stlc;l! \letrocb l'sed in thisSr.ld~

-19 ~{1 50

52

55

biI 61 61 "0 "0 '70 '6 76 91 91,

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.'.6 Data At:alysi, Jr.d Flnd;ngs: l'erfonlwnce . 5.n.1 S~tJl:n:aryResu:b for l'erfor:nanee

95 105 Data Aldy ,is and Findings: Ri,k

5. '.: Sl::nlllary Result,; I;"rRisk

5.8 DatI :\n3lysIs- 2nu F:ndjngs:D:s.c1\y~;urt:

:'.~_I

\r

~ight:ngPrDccdt:re:-i forDi~c~o~-,lr.;'ItC1l1S , ...

I13

ii.+

5.'.2 ProCk of R.:spondents and thcRe:i~hi:llYTest . ~.:-'.1.2.2 Rcsron~~~from Fir.anc:aIAnalys.(~ , 5.~. :'.S.I.2. Respons.:s ... R~~~('r.~t:~trom -\l,:CounL.:lIlts _. _ _ _ 115 116 118 119 I "

.'-135 1.+1

I"'

5.9.3 Discussion on theFir:dir:g~ ()fBo~:rd Sih,' ....

5.9.4 Dl':'("L:~s;ononth~F:nJ:ngs ofDin:ch}rOwr:er~hir

5.9.5 DISC "ssion on th.: Lndings of Institutional0\\nash)' '.9.6 Discu,sion on [he Findings of Blod O\\t:cr,hq'

10DlsLl:ssion on the TheoreticalBackgrL'~tJlcof the Study. the \IeCG ,2(01)

and La\\ Ref"rms in \13Iaysia.. \-12 5.S.3 Dis("ussior: on\\'t::~hling theSC{lrCfor ea\.'hDi~c~o~lIr~ [tcm.

5.:-'_-+ RC'~ultsfortb~Association of CorporuteGtH'CrnancL'on Dijl"!osurC'..

5.8.4.1 SumluaryRL'.,~dtsforDisc~osl1rc .

5.G D~s("u"...ior:onSL~l:m~try F:n{::ngs.

5.9.1 Discl:ssion on the Findings "f BOJrdL~ad.:rshipStructure. 5.'J.2 DisClbsion on tl:c Findings of Board Composition

.' 10.: Di,cbsion oftl:e Agcncy n:eory .... 1.+2 10.2\\cakncss oftk Exist;ng \lCCCi 1200] I and Law Reforms in \Ialaysia. :.+3

'. lO.2.1 Situations thaI \lake Corpnratc (imernar:cc Sy,;tCJl1 Less

EtT~eti\ein \labysia 10.21 I Pol:tieal Problem, .. ,0.2.1.2 Chncrship Problc:ns 5.10.2.1.3 Llin;re .

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Condu~ion...

CHAPTER 6: Fl"DI"GS FRO\l SnllLT \,rotS TESTS .\:\0 I"TER\IE\\S

6.~ lntroJuct:on ....

6.~ Dc" elopn:el11 ofHYPUlh,"~,on tl:e R,iationsh:;) among Pcrfonnance. Risk and

[h,-c.osun: ._

6.2, 1n.:\elopnl..:-r~tDfH~ThHhc~is or: 'h..: Sitr.ultan':O"J:;R~:atior.sh:p among Risk. Perfonnance

,mc

Di,closur~.

6.2.2 Dc\-('~opmentof HypIJtb::-':s on tb: S:n:ulwcccusRdatj('r.~lLp an:ong Perfonn;;.n .... .;. Disclosure andRi~k., ..

6.~,' I)e\·elo;,m~l:t"fIlypOlhesis or.th~SimultaneolbR~latior.ship

31110ngDi~L :l~... ur\? Risk and Pcrfonnance .

6,] Devciopmem ofS:muhan~oLlsbpations 10 Examine th, Rdatiolhhip among Rtsk. Pcrfonr.ance andD:sdos-Jfc ..

6.4. S~ml::t2.n":i)lb E~l1atjon RC~l;lts

6.4.1 Sl:m;]tan,uCls EquationR~sul"among Risk.Pcrfonnan~~ U~s;:lo~-,tn:

6.4.2 Simultan,.:o-J.~E:.qllationRC~L:lts an:ong P;;rfor:1l2nCc,[):~clo:-'lIrc

t).4.~ S;n:·.dwncc't:~ I".~~uati(,r, re~'J:ballli..H1gD::,c1o:'iun:.Ri~kanc

P..:rfonl1~nc~,

6_5.1 O~.,;crlp{ion of]r.t~n:e\\~('s acd]nkT\ :C\\ Qucqions

6.5.1 Firli..-:ing-;:Pen:c:"nion:-.ofInt~T\-:e\\'.::C~.

6.5.2.1 Docs Corp..xateG:...n-t:IT.ancc Play;;.n ImpiJrtant Role in the l3ankini' [ndustr,? ...

h.5.~.':Ol1esCorporat~(Jo\-crnanl:l...' of the-13~:nking Industry ImprO\~Due to theIWI'I-':llcnWt;ol~"fth"\leU; 12i1011' ...

65~.3 What are the \!ai·, Factors th,!! \lak"B'l1lkil:~ Inl~llstnto Comply '" i\l~ th~ \ICCC, 1211(1 {

r'

-1'1 ISO ISO 150 151 155 156 [57 15~ :5~

,60

160 161 '162

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6.5.1A \\'hatar~ th~\I,"r and the:L~a'tlmp0r1atll \lcclwni,ms

among the: Corporat, Go'ernance: \kchani,m,;" ) 61

6 ..:'.2.5 \\"hat an: the B\?stS~I:t2:-,k \ka:-';'lr..:~ forth..:1'crfo[:1130....' of

the Banks' 163

6.5.2.0 IsRi~kImportant in[t~Bank:ng Sector"? 163 6.5.1.7,'\r~the Ri,k Proxie, in rh" Stud\ <jooo l.nollgl: to \k,:sure the Ri,ks

ofth~Bank,;" , : 63

6,~,1.S Is th~ Infor.naliunDi,closur~ir. the :\nnual Re:port Importatll for thc

In\,~,torsto\lak~an Inycstme:nr Dec,ion':"" 164 6.~,:,'iDoes thc B"nk '\cgara \lalaysla Strie:tl\ \lor,iterr~cInfiJrmation

Dis-~:o,ure in lr.c AnOl;al Report" " 164 6.5.2.10 I,t~c\ICCe; 1200 II suitable in the !\lala\SIancont~xr' 164

6.~:.Ii I, thc \lCCG I:00II Effeeti'c in t"r:m of In:pleJr.~ntati,'n'n th"

BankingIndLJSlT~" 16~

6.5.1.12 \\hal are l~"Sl:ggcsrions to Impn"" the CLlrrent Corporatc Go\em-ance S\,rcm in \lalay,ia',' . 165

6.6 Di,;;cl:-.sion or. th:.: Summar: RC'~l:ltsand Conclus:en , 192

CHAPTEI{ 7: Sl\I:\I\R\

or

THE RESEARCH. U\IIL\ T10'S&

SlGGESTlO\S FOR HITRI:: I{fSEAIKH 161'

- I SUll::1l:on oftl,:Rc,~ar:h'" ;6S

7.3 Limitation:-- ot'thL"R..:s~~rch .

:A Sug~':~li(lnsfelTFUll:r('R;2~1?3rch

BIBLJOC'R,,\I'HY

6

17~

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1.i:':1(IfGraph~. Li ..t ofAh~n.:\iations . .~PPr:'\DIXI(al.. APPE,\DIXI(,-,i APPE,\DlX I Ie) APP[,\DlX II

un

APPE,\D!X II Ibl .-\PP['\D!X IIicI .\I'I'I:'\DIX II Idl .\PI'I:'\DIX 111 .\PI'I:'\DIX IV .. AI'I'I:'\DIX \ ~PPF'\DlX\1 ]99

::00

~O-l ~06

Figure

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References

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