The Effects of Corporate Governance on Company Performance and Dividends in Three Asean Countries

Werner Ria Murhadi

Abstract


This study aims to investigate the effects of corporate governance on company performance and dividends paid by the company. In developing countries where the protection system against public investors is still weak, corporate governance becomes important. This study uses a sample of manufacturing companies in three developing countries. i.e., Indonesia, Malaysia, and Thailand. The variables that represent corporate governance are board characteristics and ownership structure. Board characteristics comprise board size, independent board, and board gender, while the ownership structure uses managerial ownership and institutional ownership. The results show that in Indonesia, corporate governance has no significant effect on company performance and dividends. In comparison, in Malaysia, the female board has a positive effect on both performance and dividends paid. Whereas in Thailand, institutional ownership has a negative effect both on performance and dividends paid. The results also consistently show that debt and company size have an effect on performance and dividends in the three countries.


Keywords


board size; independent board; board gender; managerial ownership; institutional ownership.

Full Text:

PDF

References


Ahmed, Z., Shakoor, Z., Khan, M.A., & Ullah, W. (2021). The Role of Financial Risk Management in Predicting Financial Performance: A Case Study of Commercial Banks in Pakistan. The Journal of Asian Finance, Economics and Business, 8(5), 639–648. https://doi.org/10.13106/JAFEB.2021.VOL8.NO5.0639

Asali, F., Murhadi, W.R. & Sutejo, B.S. (2021). The effect of corporate governance and financial factors on dividend payment. Contemporary Research on Business & Management. London: CRC Press/Balkema, Taylor & Francis Group.

Benjamin, S.J. & Biswas, P. (2018). Board gender composition, dividend policy and COD: the implications of CEO duality. Accounting Research Journal 32(3), 454-476.

Bosse, D.A. & Phillips, R.A. (2016). Agency theory and bounded self-interest. Academy of Management Review 41(2), 276-297.

Buachoom, W. (2017). Simultaneous relationship between performance and executive compensation of Thai non-financial firms. Asian Review of Accounting 25(3), 404-423.

Buallay, A. (2019). Corporate governance, Sharia’ah governance and performance A cross-country comparison in MENA region. International Journal of Islamic and Middle Eastern Finance and Management 12(2), 216–235.

Christianto, A., Murhadi, W.R. & Wijaya, L.I. (2021). Corporate governance, transparency and stock return synchronicity. Journal of Entrepreneurship & Business 2(1), 1-10.

Firth, M., Gao, J., Shen, J. & Zhang, Y. (2016). Institutional stock ownership and firms’ cash dividend policies: evidence fromChina. Journal of Banking & Finance 65, 91-107.

Frynas, J.G. & Stephens, S. (2015). Political corporate social responsibility: reviewing theories and setting new agendas. International Journal of Management Reviews 17(4), 483-509.

Gul, F.A., Srinidhi, B. & Ng, A.C. (2011). Does board gender diversity improve the informativeness of stock prices? Journal of Accounting and Economics 51(3), 314-338.

Hadi, A.P.K., Murhadi, W.R. & Sutejo, B.S. (2021). Good corporate governance and agency cost in Indonesia. Contemporary Research on Business & Management. London: CRC Press/Balkema, Taylor & Francis Group.

Jeon, J.Q., Lee, C. & Moffett, C.M. (2011). Effects of foreign ownership on payout policy: evidence fromthe Korean market. Journal of Financial Markets 14(2), 344-375.

Khalid, A.A., Haron, H. & Masron, T.A. (2018). Competency and effectiveness of internal shariah audit in Islamic financial institutions. Journal of Islamic Accounting and Business Research 9(2).

Kim, I.J., Eppler-Kim, J., Kim, W.S. & Byun, S.J. (2010). Foreign investors and corporate governance in Korea. Pacific-Basin Finance Journal 18(4), 390-402.

Kim, S.I. & Shin, H. (2021). The Relationship between Ownership Control Disparity and Firm Value: Empirical Evidence from High-Technology Firms in Korea. The Journal of Asian Finance, Economics and Business, 8(5), 749–759. https://doi.org/10.13106/JAFEB.2021.VOL8.NO5.0749

Muntahanah, S., Kusuma, H., Harjito, D.A. & ARIFIN, Z. (2021). The Effect of Family Ownership and Corporate Governance on Firm Performance: A Case Study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(5), 697–706. https://doi.org/10.13106/JAFEB.2021.VOL8.NO5.0697

Mehdi, M., Sahut, J.M. & Teulon, F. (2017). Do corporate governance and ownership structure impact dividend policy in emerging market during financial crisis? Journal of Applied Accounting Research 18(3), 274-297.

Moriarty, J. (2016). The demands of stakeholder theory for corporate governance. Business Ethics Journal Review (4)8, 47-52.

Rajput, M. & Jhunjhunwala, S. (2019). Corporate governance and payout policy: evidence from India. Corporate Governance 19(5), 1117-1932. DOI 10.1108/CG-07-2018-0258.

Saidat, Z., Silva, M. & Seaman, C. (2018). The relationship between corporate governance and financial performance Evidence from Jordanian family and nonfamily firms. Journal of Family Business Management 9(1), 54-78.

Seputro, F.H., Murhadi, W.R. & Herlambang, A. (2020). Faktor-faktor yang mempengaruhi Dividend perusahaan sector manufaktur yang terdaftar di Bursa Efek Indonesia dan Bursa Malaysia. Journal of Entrepreneurship & Business 1(1): 43-55.

Zona, F., Gomez-Mejia, L.R. & Withers, M.C. (2015). Board interlocks and firm performance: toward a combined agency–resource dependence perspective. Journal of Management. doi: 0149206315579512.




DOI: http://dx.doi.org/10.24856/mem.v36i2.2224

Article Metrics

Abstract view : 478 times
PDF - 0 times

Refbacks

  • There are currently no refbacks.


Copyright (c) 2021 Media Ekonomi dan Manajemen

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

View My Stats

 
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.