Corporate Governance Mechanisms and Firm Performance: Case of Family and Non-Family Companies in Malaysia

CORPORATE GOVERNANCE MECHANISM AND FIRM PERFORMANCE : CASE OF FAMILY AND NON FAMILY COMPANIES IN MALAYSIA

Noor Afza Amran
Ayoib Che Ahmad

A lot of studies have been carried around the world on family firms and performance, but yet little research done in Malaysia. Thus, the objective of this paper is to examine the impact of corporate governance mechanism on family and non-family firms. performance. The sample size of this study is 1640 Main Board companies listed in Bursa Malaysia from 2003 to 2007.
Findings from this study revealed that there are differences in firm performance between family firms and non-family firms as measured by TOBINS Q and ROA. For corporate governance attributes, only some variables that is significant. Meeting and leadership structure are found to be differed between family and non-family companies. This indicates that family companies do have different corporate governance practised than non-family companies. Thus, regulators and investors at large should be sensitive on this matter. Family companies practised different set of strategies, rely on family internal control and have high degree of familiness. Therefore, future research may examine the role of family succession as this indicator may also influence the firm performance.Keywords: corporate governance, performance, family firm, non-family firm, Malaysia.

(SRS-029)