Shariah Compliant, Dividend Yield, MCCG, Corporate Governance and Independent directors.
The main purpose of this study is to examine the effects of implementation of Malaysian Code of Corporate Governance (MCCG) 2007 towards a public listed company’s performance in relation to a Shariah or non-Shariah compliant. The MCCG had become indispensable part of the Bursa Malaysia Listing Rules, which requires all listed companies to disclose the extent of compliance with it. The amended code of Corporate Governance emphasized several significant changes on the earlier code of MCCG 2000 which is made vital to safeguard the interests of all investors without violating the principles of Shariah. The study focuses on the 37 Malaysian PLCs excluding financial institutions for the period of 2000 to 2010. Statistical tests of Newey West T-Test and the R2 were used to determine whether there was enough evidence to reject a null hypothesis about the processes. The findings suggest that there is a significant relationship between governance attributes and financial performance in effect of the implementation of MCCG 2007 towards Shariah compliant company’s performance measured by dividend yield (DY). Comparatively, it was also found out that there is a significant inverse relationship between the number of independent directors towards a non-Shariah compliant company’s performance measured by earnings per share (EPS). This relationship denotes a 1% significant level which testifies that changes in the number of independent directors may influence the company’s EPS oppositely. The study also highlighted the importance for Malaysian PLCs to continuously practice good corporate governance regardless of Shariah compliant as it ensures the shareholders and potential investors a safety investment through the presence of independent directors.
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