Corporate Governance: A Case Study of SMEs in Malaysia

Nu Nu Htay, Sheila; Ahmed Salman, Syed
December 2013
Middle East Journal of Scientific Research;2013, Vol. 18 Issue 2, p243
Academic Journal
Case Study
The important role of board of directors has been widely acknowledged by the industrial players, regulators, investors and researchers nowadays. Well-executed and better-governed corporations are less likely to have less management problems. They respond and recover from financial shocks more swiftly; consequently they achieve quicker and more sustainable growth. Thus, many developed and developing countries as well as international organizations have come out with the guidelines for good corporate governance practices. However, most of guidelines focus on the public listed companies, not on small and medium sized enterprises (SMEs). In our opinion, regardless of the size of the business, there is a need for good corporate system to ensure that transparency, accountability and disclosing all the financial information for the betterment of the enterprises. Thus, this research aims to explore on the perception of SMEs towards the important role of governance and their perceived level of importance of each task and responsibility of board of directors. SMEs operating in Kuala Lumpur and Selangor are focused in this study. Questionnaire survey is used and random sampling method is employed in this study. The findings from 945 SME respondents show that SMEs recognize the important role of corporate governance players. Hence, the regulators need to come out with the good corporate governance practices for SMEs which mainly includes written policy on corporate governance practice and responsibility of board of directors. It is expected that these findings will be the interest of regulators and SMEs players for future development of this sector.


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