Effect of CEO power on Malaysian firm performance

Wong Yin Theng, Hooy Chee-Wooi,

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Type :	article
Subject :	HB Economic Theory
ISSN :	2232-0032
Main Author :	Wong Yin Theng, Hooy Chee-Wooi,
Title :	Effect of CEO power on Malaysian firm performance

Place of Production :	Universiti Pendidikan Sultan Idris
Year of Publication :	2017

Full Text :

This study extends the literature understanding on the role of CEO on firm performance by providing more precise measurement of CEO power. Firm performance is measured using Tobin Q measure and ROA. CEO power is being proxied by using three different variables which are founder dummy, duality dummy and degree of shares ownership. The sample study involves public listed companies in Malaysia ranging from year 2001 until year 2012. The regression results show that founder CEO and CEO ownership do show negative and significant effect on Tobin Q. This is consistent with our hypothesis which suggests that when a company with CEO that possess high power, the firm performance will become deteriorate due to agency concern. All four control variables, which are firm size, firm age, leverage and number of segment show significant effects on Tobin Q. The findings remain significant even when financial crises were controlled.

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