Corporate Governance Mechanisms, Succession Planning and Firm Performance: Evidence from Malaysian Family and Non-Family Controlled Companies

• Main Author: Noor Afza, Amran
• Format: Thesis
• Language: English; English
• Published: 2010
• Subjects: HD2709-2930.7 Corporations
• Online Access: https://etd.uum.edu.my/2428/1/Noor_Afza_Amran.pdf; https://etd.uum.edu.my/2428/2/1.Noor_Afza_Amran.pdf; https://etd.uum.edu.my/2428/; http://lintas.uum.edu.my:8080/elmu/index.jsp?module=webopac-l&action=fullDisplayRetriever.jsp&szMaterialNo=0000766983

The combination of corporate governance mechanisms and family succession play an important role in enhancing companies' performance, and in ensuring that family companies are sustained for the next generation. This study investigates the effect of corporate governance mechanisms (board and ownership structure) and succession attributes with company performance among Malaysian listed companies. This study used the panel data approach, and 420 companies on Bursa Malaysia were included as the sample. The results explain that family-controlled companies have higher firm value than non-family controlled companies. However, not all elements of governance mechanisms are significant, and the effects differ between family-businesses and non-family businesses. The results indicate that larger board size and inclusion of professional directors (experts) enhance firm value, both for family and non-family controlled companies. Further analysis shows that family and non-family companies that practise dual leadership show higher company performance. In terms of ownership structure, managerial and family ownership were found to show a non-linear pattern (entrenchment-alignment-entrenchment) with firm performance. Findings also signify that family CEO, CEO with higher education background, young CEO's and second generation CEO's enhance greater company performance. Thus, regulators need to note the different corporate governance practices between family and non-family businesses, and to create a pool of independent directors with-experience and skills in enhancing better corporate governance in Malaysia.