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Research Anthology on Strategies for Maintaining Successful Family Firms
This chapter analyses the relationship between related party transactions (RPT) and firm value an... more This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporatio...
Journal of Family Business Management
PurposeThis paper examines the relationship between the number of domestic banks that the firm en... more PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relations...
Asia Proceedings of Social Sciences
This manuscript is about the influence of directors’ remuneration on firm performance and whether... more This manuscript is about the influence of directors’ remuneration on firm performance and whether independent directors’ tenure in the remuneration committee moderates this relationship. The results show that within family corporations in industries which are not exclusive, non-executive directors’ remuneration have a significant negative relationship with firm performance. Family firms have a stronger significant negative relationship than non-family firms. Within family firms in non-exclusive industries, there is also a positive moderating effect of independent directors’ tenure within the remuneration committee on the influence of non-executive directors’ remuneration on firm performance. In this case, corporations owned by families have a stronger positive moderating effect compared to non-family firms. Our study has significant policy implications with respect to how the Securities Commission (SC) should design and implement proper rules and regulations to govern remuneration o...
International Journal of Organizational Leadership
Most corporate governance discussions center on traditional shareholder-manager problems or agenc... more Most corporate governance discussions center on traditional shareholder-manager problems or agency problem type I. These discussions typically assume that greater insider ownership leads to better corporate governance (Morck & Yeung, 2003) because managers who own large blocks of shares in their firms are less likely to take actions which reduce the value of their shares (Jensen & Meckling, 1976). This mitigation framework is certainly true in the most developed economies whereby ownership structures are very much diffuse (Morck & Yeung, 2003). However, this framework may not work in emerging markets where ownership structure is highly concentrated and most of them are family-controlled firms. The Review of Literature Corporate Governance Development and Regulatory Framework One of the major causes of post-1997 Asian financial crisis corporate governance was the reforms in the Malaysian Code on Corporate Governance (MCCG) which was established in 2000. The World Bank in its assessments on the observance of Corporate Governance codes in Malaysia since 2001 observed that Malaysia has faced several challenges in improving its corporate governance practices due to its institutional setting. It was highlighted that the government's level of equity ownership has remained large, whilst free float has remained low and directors' accountability and protection for minority shareholders were significantly low. Furthermore, the role of institutional investors and shareholder activism in the corporate governance framework were weak. According to World Bank reports during 2001 and 2005, the corporate governance landscape in Malaysia transformed significantly as firms enhanced their corporate governance systems. These initiatives made a difference when Malaysian firms with concentrated ownership produced better accounting results (Haniffa & Hudaib, 2006). After outlining the reports of World Bank in 2005 on the inadequacies of the corporate governance reforms, the code was revised in 2007. The Malaysian Code on Corporate Governance 2007 (MCCG 2007) emphasized on strengthening the board of directors and audit committees and ensuring that the board of directors and audit committees discharge their duties and responsibilities effectively. To sustain the corporate governance climate, the Securities Commission (SC) published the Corporate Governance Blueprint 2011 in 2011. This blueprint further focuses on the exercise of shareholder rights, role of institutional investors, board's role in governance, improving disclosure and transparency, role of gatekeepers and influencers, as well as public and private enforcement. To spearhead the Corporate Governance Blueprint 2011, the Securities Commission further revised the MCCG 2007 in 2012. The MCCG 2012 which supersedes the 2007 code, sets out principles, structures, and processes for companies' board so that the board could incorporate good corporate governance into their firms' business dealings and corporate culture. Despite the issuance of the MCCG in 2000, 2007, and 2012, these codes of corporate governance possibly are ineffective for improving corporate governance, i.e., reducing minority shareholder expropriation due to the voluntary nature of its adopted principles (Aguilera & Cuervo-Cazurra, 2009). In Malaysia, the controlling shareholders possibly consider the adoption of these principles obligatory, and this offers them some kind of incentives to expropriate minority shareholders, even though, they are still required to state the extent of their compliance in their annual reports, with an explanation for any departure (Wahab et. al., 2007). Apart from MCCG, the Bursa Malaysia listing requirements is another mechanism in promoting good corporate governance among Malaysian public-listed firms. However, unlike the MCCG which is voluntary, these requirements are mandatory. Bursa Malaysia has the power to reprimand, fine, or suspend the listed firms and/or its defaulting dealers. Furthermore, it has the power to issue a warning letter, private or public reprimand, impose a fine, suspend the trading, or delist an issuer from the official list of the exchange. However, the complemented powers and activities at Bursa Malaysia are always subject to judicial review. Although the listing requirements in Bursa Malaysia can be argued to be as effective mechanisms in promoting good corporate governance, it is not entirely effective due to the possibility of judicial
Canadian Institute for Knowledge Development (CIKD)
This paper was conducted to examine whether there was a negative relationship between independent... more This paper was conducted to examine whether there was a negative relationship between independent directors’ tenure and firm value which indicated the existence of expropriation due to long tenure of independent directors and whether controlling shareholders’ ownership moderated this relationship among Malaysian firms. The results revealed that there was a negative relationship between independent directors’ tenure and firm value. It also showed there was a significant positive moderating effect of controlling shareholders’ ownership on the relationship among Malaysian family firms in exclusive industries. However, there was inconclusive evidence that this negative relationship and positive moderating effect were stronger amongst the family firms compared with non-family firms.
The Journal of Developing Areas, 2015
We examine the relationship between related party transactions (RPTs) and firm value and how this... more We examine the relationship between related party transactions (RPTs) and firm value and how this relationship is moderated by ownership concentration using a sample of 379 listed family and 151 non-family firms for the period 2007 to 2009. Ordinary Least Square Pooled Model as well as Fixed Effects Model panel data regressions are used in the data analysis. For family firms, we find that RPTs reduce firm value (proxied by Tobin’s Q and market-to-book value). Further, controlling shareholders’ ownership has a significant positive moderating effect on this relationship. However, for non-family firms, there is no significant evidence of firm value reduction and positive moderating effect respectively. We conclude that expropriation via RPTs is stronger in family firms compared to non-family firms. Additionally, an increase in controlling shareholders’ ownership helps mitigate this expropriation and this mitigating effect is stronger in family firms compared to non-family firms. The implications for the capital market regulator are discussed in this paper.
F1000Research
The banking and financial sectors have witnessed a significant development recently due to financ... more The banking and financial sectors have witnessed a significant development recently due to financial technology (FinTech), and it has become an essential part of the financial system. Many factors helped the development of this sector, including the pandemics such as Covid-19, the considerable increasing market value of the FinTech sector worldwide, and new technologies such as blockchain, artificial intelligence, big data, cloud computing and mobile technology. Moreover, changes in consumer's preferences, especially the Z-generation (digital generation). FinTech shifted the traditional business models to mobile platforms characterized by ease of access and swift transactions. Mobile technology became the main backbone for FinTech innovations and acts as a channel to deliver FinTech services that overcome all geographical and timing barriers, thus enhancing financial inclusion. Mobile perceived Trust (MPT), or the trust in using financial business models via mobile technology, i...
This paper aims at investigating consumers' perception on the Corporate Social Responsibility (CS... more This paper aims at investigating consumers' perception on the Corporate Social Responsibility (CSR) practices of the telecommunication service companies in Malaysia, and its antecedent to consumer attitude. The local telecommunication service providers have emphasized on service quality, stakeholder value, corporate reputation, and innovation to achieve good business performance. However, little is known about the contribution of service quality, stakeholder value, corporate reputation, and innovation on the effectiveness of organisational CSR practices. Furthermore, lack of previous studies that have investigated the impact of organisational CSR practices on consumer attitude, particularly in the context of Malaysian telecommunication industry. With the adoption of structural equation modeling approach and survey method, a total of 360 samples comprising the prepaid and postpaid mobile consumers were obtained for this study. The results shown that consumers' perception on service quality and stakeholder value had significant relationship with CSR practices. However, consumers' perception on corporate reputation and innovation had no significant relationship with CSR practices. CSR practices was positively related to consumer attitude. In the theoretical implications, service quality and stakeholder value variables were found as important elements in the proponents of Strategic CSR Theory. In the managerial implications, this study recommended that the telecommunication service providers should highly focus on more effective planning and implementation of CSR practices through better integration of CSR in its core business functions and value chain system, diversification of CSR scope and stakeholders engagement.
Research Anthology on Strategies for Maintaining Successful Family Firms
This chapter analyses the relationship between related party transactions (RPT) and firm value an... more This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporatio...
Journal of Family Business Management
PurposeThis paper examines the relationship between the number of domestic banks that the firm en... more PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relations...
Asia Proceedings of Social Sciences
This manuscript is about the influence of directors’ remuneration on firm performance and whether... more This manuscript is about the influence of directors’ remuneration on firm performance and whether independent directors’ tenure in the remuneration committee moderates this relationship. The results show that within family corporations in industries which are not exclusive, non-executive directors’ remuneration have a significant negative relationship with firm performance. Family firms have a stronger significant negative relationship than non-family firms. Within family firms in non-exclusive industries, there is also a positive moderating effect of independent directors’ tenure within the remuneration committee on the influence of non-executive directors’ remuneration on firm performance. In this case, corporations owned by families have a stronger positive moderating effect compared to non-family firms. Our study has significant policy implications with respect to how the Securities Commission (SC) should design and implement proper rules and regulations to govern remuneration o...
International Journal of Organizational Leadership
Most corporate governance discussions center on traditional shareholder-manager problems or agenc... more Most corporate governance discussions center on traditional shareholder-manager problems or agency problem type I. These discussions typically assume that greater insider ownership leads to better corporate governance (Morck & Yeung, 2003) because managers who own large blocks of shares in their firms are less likely to take actions which reduce the value of their shares (Jensen & Meckling, 1976). This mitigation framework is certainly true in the most developed economies whereby ownership structures are very much diffuse (Morck & Yeung, 2003). However, this framework may not work in emerging markets where ownership structure is highly concentrated and most of them are family-controlled firms. The Review of Literature Corporate Governance Development and Regulatory Framework One of the major causes of post-1997 Asian financial crisis corporate governance was the reforms in the Malaysian Code on Corporate Governance (MCCG) which was established in 2000. The World Bank in its assessments on the observance of Corporate Governance codes in Malaysia since 2001 observed that Malaysia has faced several challenges in improving its corporate governance practices due to its institutional setting. It was highlighted that the government's level of equity ownership has remained large, whilst free float has remained low and directors' accountability and protection for minority shareholders were significantly low. Furthermore, the role of institutional investors and shareholder activism in the corporate governance framework were weak. According to World Bank reports during 2001 and 2005, the corporate governance landscape in Malaysia transformed significantly as firms enhanced their corporate governance systems. These initiatives made a difference when Malaysian firms with concentrated ownership produced better accounting results (Haniffa & Hudaib, 2006). After outlining the reports of World Bank in 2005 on the inadequacies of the corporate governance reforms, the code was revised in 2007. The Malaysian Code on Corporate Governance 2007 (MCCG 2007) emphasized on strengthening the board of directors and audit committees and ensuring that the board of directors and audit committees discharge their duties and responsibilities effectively. To sustain the corporate governance climate, the Securities Commission (SC) published the Corporate Governance Blueprint 2011 in 2011. This blueprint further focuses on the exercise of shareholder rights, role of institutional investors, board's role in governance, improving disclosure and transparency, role of gatekeepers and influencers, as well as public and private enforcement. To spearhead the Corporate Governance Blueprint 2011, the Securities Commission further revised the MCCG 2007 in 2012. The MCCG 2012 which supersedes the 2007 code, sets out principles, structures, and processes for companies' board so that the board could incorporate good corporate governance into their firms' business dealings and corporate culture. Despite the issuance of the MCCG in 2000, 2007, and 2012, these codes of corporate governance possibly are ineffective for improving corporate governance, i.e., reducing minority shareholder expropriation due to the voluntary nature of its adopted principles (Aguilera & Cuervo-Cazurra, 2009). In Malaysia, the controlling shareholders possibly consider the adoption of these principles obligatory, and this offers them some kind of incentives to expropriate minority shareholders, even though, they are still required to state the extent of their compliance in their annual reports, with an explanation for any departure (Wahab et. al., 2007). Apart from MCCG, the Bursa Malaysia listing requirements is another mechanism in promoting good corporate governance among Malaysian public-listed firms. However, unlike the MCCG which is voluntary, these requirements are mandatory. Bursa Malaysia has the power to reprimand, fine, or suspend the listed firms and/or its defaulting dealers. Furthermore, it has the power to issue a warning letter, private or public reprimand, impose a fine, suspend the trading, or delist an issuer from the official list of the exchange. However, the complemented powers and activities at Bursa Malaysia are always subject to judicial review. Although the listing requirements in Bursa Malaysia can be argued to be as effective mechanisms in promoting good corporate governance, it is not entirely effective due to the possibility of judicial
Canadian Institute for Knowledge Development (CIKD)
This paper was conducted to examine whether there was a negative relationship between independent... more This paper was conducted to examine whether there was a negative relationship between independent directors’ tenure and firm value which indicated the existence of expropriation due to long tenure of independent directors and whether controlling shareholders’ ownership moderated this relationship among Malaysian firms. The results revealed that there was a negative relationship between independent directors’ tenure and firm value. It also showed there was a significant positive moderating effect of controlling shareholders’ ownership on the relationship among Malaysian family firms in exclusive industries. However, there was inconclusive evidence that this negative relationship and positive moderating effect were stronger amongst the family firms compared with non-family firms.
The Journal of Developing Areas, 2015
We examine the relationship between related party transactions (RPTs) and firm value and how this... more We examine the relationship between related party transactions (RPTs) and firm value and how this relationship is moderated by ownership concentration using a sample of 379 listed family and 151 non-family firms for the period 2007 to 2009. Ordinary Least Square Pooled Model as well as Fixed Effects Model panel data regressions are used in the data analysis. For family firms, we find that RPTs reduce firm value (proxied by Tobin’s Q and market-to-book value). Further, controlling shareholders’ ownership has a significant positive moderating effect on this relationship. However, for non-family firms, there is no significant evidence of firm value reduction and positive moderating effect respectively. We conclude that expropriation via RPTs is stronger in family firms compared to non-family firms. Additionally, an increase in controlling shareholders’ ownership helps mitigate this expropriation and this mitigating effect is stronger in family firms compared to non-family firms. The implications for the capital market regulator are discussed in this paper.
F1000Research
The banking and financial sectors have witnessed a significant development recently due to financ... more The banking and financial sectors have witnessed a significant development recently due to financial technology (FinTech), and it has become an essential part of the financial system. Many factors helped the development of this sector, including the pandemics such as Covid-19, the considerable increasing market value of the FinTech sector worldwide, and new technologies such as blockchain, artificial intelligence, big data, cloud computing and mobile technology. Moreover, changes in consumer's preferences, especially the Z-generation (digital generation). FinTech shifted the traditional business models to mobile platforms characterized by ease of access and swift transactions. Mobile technology became the main backbone for FinTech innovations and acts as a channel to deliver FinTech services that overcome all geographical and timing barriers, thus enhancing financial inclusion. Mobile perceived Trust (MPT), or the trust in using financial business models via mobile technology, i...
This paper aims at investigating consumers' perception on the Corporate Social Responsibility (CS... more This paper aims at investigating consumers' perception on the Corporate Social Responsibility (CSR) practices of the telecommunication service companies in Malaysia, and its antecedent to consumer attitude. The local telecommunication service providers have emphasized on service quality, stakeholder value, corporate reputation, and innovation to achieve good business performance. However, little is known about the contribution of service quality, stakeholder value, corporate reputation, and innovation on the effectiveness of organisational CSR practices. Furthermore, lack of previous studies that have investigated the impact of organisational CSR practices on consumer attitude, particularly in the context of Malaysian telecommunication industry. With the adoption of structural equation modeling approach and survey method, a total of 360 samples comprising the prepaid and postpaid mobile consumers were obtained for this study. The results shown that consumers' perception on service quality and stakeholder value had significant relationship with CSR practices. However, consumers' perception on corporate reputation and innovation had no significant relationship with CSR practices. CSR practices was positively related to consumer attitude. In the theoretical implications, service quality and stakeholder value variables were found as important elements in the proponents of Strategic CSR Theory. In the managerial implications, this study recommended that the telecommunication service providers should highly focus on more effective planning and implementation of CSR practices through better integration of CSR in its core business functions and value chain system, diversification of CSR scope and stakeholders engagement.