Board structure and ownership in Malaysia.pptx

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    Board structure and ownership inMalaysia:

    the case of distressed listedcompanies

    By: Shamsul Nahar Abdullah

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    Abstract:

    Purpose: This study wants to examine the efect oboard independence, CEO duality and ownershipstructure on nancial distress status

    Methodoloy: !ata rom annual reports o "on#distressed and distressed rms

    $indin: %oard &ndependence and CEO duality nolin', "on#ex directors neati(e lin', outsiderneati(e lin',

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    Intorduction:

    &n current situation, emphasis has been made onreorms in the board directors, because the board odirectors has not ullled their roles)

     This paper will nd the relationship between boardstructure and ownership structure with nancialdistress in Malaysia)

    *Concentrated shareholdins by indi(iduals andamilies and shareholdins by o(ernment) +Maly

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    Introduction:

    $inancial distress rms ha(e to tac'le se(eralcorporate o(ernance issues, especially the directors-efecti(eness in accomplishin their monitorin roles)

    %oard o directors has not dischared its duciaryroles efecti(ely)

    Primary contribution o this study is the settin inwhich this study is conducted within an emerineconomy)

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    Malaysian Paper

    Chinese and Malays dominate the economics and politics inMalaysia pro(ides a uni.ue research settin)

     This diference directly afect the operations o %O!)

    * /nother contribution o this study is that is adopted diferentdenition o nancial distress as compare to pre(ious studies)

    Introduction:

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    !enition o $inancial !istress: $inancial distress is a term in corporate

    nance used to indicate a condition when

    promises to creditors o a company arebro'en or honored with di0culty) & nancialdistress cannot be relie(ed, it can lead toban'ruptcy) )))

    / condition where a company cannot meetor has di0culty payin of its nancialobliations to its creditors)

    Theoretical development:

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    Malaysian Paper& boards are efecti(e, companies would not ha(e borrowedexcessi(ely and thus ris' o nancial distress could be a(oided)%O! is the 1ultimate center o control2 o a corporation)

    Theoretical Development:

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    Theoretical Development:

    !: Board Independence is ne"atively associated with#nancial distress status$

    34: There is a neati(e association between CEO dualitystructure and nancial distressed companies

    35: Manaement interests are neati(ely associated withnancial distress)

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    Theoretical Development:

    %: Non&e' directors( interests are ne"atively associatedwith #nancial distress$

    36: The extent o outside bloc'holders interests is neati(elyassociated with nancial distress companies)

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    Malaysian Paper

    !e#listin 7eulation:8) !ecit in the ad9usted shareholders- e.uity4) /ppointment o recei(ers andor Manaers o(er the property othe listed issuers)5) /d(erse opinions or disclaimers in respect o the oin concern

    rom the auditor or;) /ppointment o special administrators pursuant to thepro(isions o the Penurusan !anaharta "asional %ehard /ct8

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    Malaysian Paper:

    >anhorne describes two situations o corporate ailure: Technical $ailure: & company is unable to meet its currentobliations)&nsol(ency in ban'ruptcy: ?hen company- s net worth isneati(e)Malaysian Companies are all under &nsol(ency in ban'ruptcy)

    Methodolo"y:

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    Pooled @oistic 7eression

     T#statistics and correlation analysis

    Methodolo"y:

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    Malaysian Paper:

    statusitABD878D474D5%!&"!itD;!F/@&TitD6MGTitDH"E!itDIOFT%@JitD=/C&"!itKit?here as:i: rm 8 throuh =HLt: year 8

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    Malaysian Paper:

    MGT: percentae o shares held by executi(e directorsL"E!: percentae o shares held by non#executi(e directorsOFT%@J: cumulati(e percentae o shares outside shareholdersholdin 6 percent or more o sharesL and/C&"!: 182 i all audit committee members are independent

    directorsL 12 otherwise)

    Model:

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    Malaysian Paper:)'pected *esults:

    Malaysian Paper:Actual *esults:

    Mean >alues:EPN:

    @i.uidity:

    Gearin 7atio:

    !istressedA #)

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    Malaysian Paper:Predicted si"ns: Actual *esults+

    &ntercept  78  74 %!&"! #

    "E!%O/7! !F/@ C37EQEC /C&"! #MO?"8 #MO?"4

    "E!O?" #OFT%@J #

    7 s.uare:)56<

    4);4HR4;)=HIS)8HR)5=5S)84IR)4;S)=54R8)548S

    #);;6R8)I

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    Malaysian Paper:&ndependent directors need to undero trainin to help themimpro(e and be aware o their responsibilities)

     This paper ofers the e(idence on the extent to which distress isassociated with corporate o(ernance rom a de(elopincountry)

     The paper should be o interest to the reulatory bodies andpractitioners)

    Policy Implications:

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