The enhancement of corporate governance in government-linked companies

This paper analyzes the development of corporate governance in Malaysian government-linked companies. Using a sample of 404 firm-year observations, this study found that corporate governance of these companies improves after the establishment of the Putrajaya Committee on GLC High Performance (PCG) in the year 2006. Specifically, board governance in terms of board independence and board active participation appears to be stronger during the period 2006–2011. Similarly, audit committee also shows improvement in governance in terms of greater independence and higher number of expertise. This study also found that for some companies that have already installed adequate level of governance during the period before the establishment of PCG, no significant changes of governance were found, whereas companies that show weak governance during the period before the establishment of PCG were found to have improved their corporate governance over the years.