Goh, KS 2008, 'Corporate governance practices of Malaysian Chinese family owned business', DBA thesis, Southern Cross University, Lismore, NSW.
Copyright KS Goh 2008
This research focused on the Chinese family owned businesses listed on the Bursa Malaysia’s Main Board, Second Board and Mesdaq. Using a combination of qualitative and quantitative approaches, this research was largely exploratory in nature. The objectives were to determine the adequacy of Government policies, the extent and nature of the corporate governance (CG) practices of the Malaysian Chinese business community (MCBC) and the impact of culture on such practices. Other important objectives were to offer recommendations for good CG practices as well as to identify issues meriting further research.
CG became prominent as a result of the 1997 Asian Financial Crisis. The multitude of corporate failures and the scale of its impact caused several authorities to categorically identify CG as an important trigger for the crisis.
Since Malaysia was hit by the crisis, the Government and its various agencies took immediate and drastic measures, including capital controls, to stem the domino effect from propagating into all sectors. The Government’s initiatives included the formulation of the Malaysian Code of Governance and the strengthening of the regulatory framework for the more effective functioning of the Securities Commission and Bursa Malaysia.
The Malaysian Chinese business community (MCBC) has long dominated the Malaysian economy and the corporate sector. Its operations are characterized by high levels of ownership concentration, cross holdings and significant management control.
Despite the government’s race based affirmative policies, including the New Economic Policy, the Chinese remained remarkably persistent. The research findings revealed that this was largely due to their business practices being guided by the teachings of I-Ching, Confucianism and Taoism.
The research also revealed that Chinese business philosophy (which is largely family control) generally does not lend itself to transparency and disclosure. The situation is however changing with the advent of globalization. This is creating the need for high technology products and services as well as for capital and expertise from outside the family circle.
Three research propositions were tested by this research. They were developed from the gaps in the existing scholarship on the research topics. Based on the analysis of the secondary data and the primary data collected through a focus group and a questionnaire survey, this investigative study resulted in several research findings. These showed that Malaysia has a good CG framework. However, the CG practices in the Malaysian Chinese family businesses warranted improvements.
The findings also permitted the crafting of several recommendations for consideration by the public authorities and the MCBC. It also generated new theory as reflected by a modified Family Based CG System to more appropriately explain the CG practices of Malaysian Chinese family controlled businesses.