Abstract Malaysian Code on Corporate Governance

Abstract Malaysian Code on Corporate Governance

Abstract



The lack or weakness of corporate governance mechanism has been acknowledged as a major contributing factor in some of the financial crisis and large corporate scandals that occured around the world for the past two decades. Since then, corporate governance has increasingly being given focus to prevent the recurrence of such incidents and promote business ethics, accountability and transparency within a company with the ultimate objective of enhancing long-term sustainability of the company and the economy in general. In the Malaysian context, the Securities Commission has issued the Malaysian Code on Corporate Governance (MCCG) that outlines principles, best practices and recommendations on corporate governance. The Code is targetted at companies listed on Bursa Malaysia with compliance to the Code is on voluntary basis, although some of the recommendations of the Code are also related with Bursa Malaysia’s Listing Requirements which are mandatory. Government-linked companies (GLCs) meanwhile, has a significant presence on Bursa Malaysia and are critical players in Malaysia’s economic development. It is based on this consideration that this study is undertaken to assess the relevance and significance of the principles and recommendations of the MCCG, and gauge the compliance of GLCs, using the G20 GLCs involved in the Government’s GLC Transformation Programme as subjects. However, contrary to the expectation when this study was first mooted, the G20 GLCs, in actual, do not fully comply with the recommedations of MCCG. Results of this study show that although most of the GLCs concerned registered full compliance with MCCG, several GLCs are still reluctant to adhere to some of the recommendations. Such non-compliance is inconsistent with Government policies and intentions, more so when one of the thrust of the GLC Transformation Programme is to enhance corporate governance practices within GLCs. As vehicles of the government, GLCs should in fact...

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