Board Remuneration, Company Performance, and Corporate Governance: Evidence from Publicly Listed Malaysian Companies

Corporate governance is hotly debated in Malaysia and elsewhere in the Asian-Pacific region. The reason for this is that several of the problems that Asian-Pacific countries faced during the crisis of 1997-1999 are blamed on weak corporate governance structures. In this study we examine the determinants of Board compensation in Malaysian companies listed on the Kuala Lumpur Stock Exchange over the period 1989 to 2000. Our objective is to examine whether corporate governance affects the relationship between performance and remuneration. We find evidence of a statistically significant positive relationship between Board remuneration and sales turnover and a statistically significant negative relationship between Board remuneration and ownership concentration. However, the relationship between Board remuneration and firm performance is ambiguous, while there is no evidence of a significant relationship between Board remuneration and sector performance.