DOES BETTER CORPORATE GOVERNANCE ATTRACT FOREIGN EQUITY OWNERSHIP? EVIDENCE FROM MALAYSIAN LISTED COMPANIES

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Yap Voon Choong, Chan Kok Thim, John Stanley Murugesu

DOI:10.22495/cocv9i4art9

Abstract

This study examines the effect of firm-level corporate governance variables on foreign equity ownership (FEO) in Malaysia. Foreign equity ownership can be an important source of capital for companies to fund their expansion and growth. To attract FEO, good corporate governance practices are vital because these practices are used to reduce or mitigate agency cost. Based on a sample of listed firms on Bursa Malaysia and employing multiple regression analysis, the study finds that a number of corporate governance mechanisms significantly improve the ability of companies to attract foreign equity ownership, especially, Insider Ownership, Government Ownership, Firm Size, Dividend Yield and Tobin’s Q. The results of the study indicate that firm-level efforts for better corporate governance sends positive signals and confidence to foreign investors.

Keywords: Foreign Equity Investment, Corporate Governance, Stock Ownership

How to cite this paper: Choong, Y. V., Thim, C. K., & Murugesu, J. S. (2012). Does better corporate governance attract foreign equity ownership? Evidence from Malaysian listed companies. Corporate Ownership & Control, 9(4), 118-125. http://dx.doi.org/10.22495/cocv9i4art9