Corpaorate Governance Mechanisms and Firm Valuation in Malaysian Listed Firms: A Panel Data Analysis

Abstract

Corporate governance mechanisms emerge to tackle agency problems in ensuring that shareholders' funds are not expropriated or wasted on unprofitable activities, The issue arises as to whether these improvements have been effective in reducing agency costs, and therefore enhancing firm value. The objectives of this paper is to examine the effects of governance mechanisms of dividend, types of ownership structure, and board governance on firm value. This paper utilises a panel data analysis of 403 firms Iisted on the Bursa Malaysia over a four-year period from years 2002 to 2005. A hierarchical regression analysis is used to test the hypotheses and the data is analysed using the generalized least square (GLS) estimation technique. Overall, the results highlight the importance of moderating role played by board governance variables with types of ownership structure to inf1uence firm value. However, the benefits of better corporate governance through enhanced board governance are not the same across all firms since their incentives vary with respect to dividend and different types of ownership structure mechanisms.

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