Corporate Governance and Corporate Performance of Malaysian Companies: Examining from an Islamic Perspective

Abstract

Good corporate governance (CG) has been widely linked to the corporate performance. Based on the traditional agency theory, maximising the shareholders’ value denotes the aim to gain better performance through profit maximisation. Taking from a different view, this study attempts to examine to which extent the companies with good CG scores will have good performance from an Islamic perspective (proxied by profit measurement). This study also intends to investigate whether the board attributes as internal governance mechanisms could exert significant influence towards a) overall corporate performance, and b) striving either for profit maximization or moderation. The data is gathered through conducting a content analysis of corporate annual reports of top 50 largest companies (which ranked based on good CG performance). The empirical results indicate that those directors who hold professional accounting qualification are statistically associated with lower total revenues. However, none of the directors’ attributes appears to have significant association with the four proxies of corporate performance. The findings further provide evidence that all board attributes fail to prove their significant influence on the profit moderation as well as profit maximization.