Mr Wong

Asian Academy of Management Journal, Vol. 12, No. 1, 23–34, January 2007

CORPORATE GOVERNANCE IN MALAYSIA: THE EFFECT OF CORPORATE REFORMS AND STATE BUSINESS RELATION IN MALAYSIA
Nor Azizah Zainal Abidin 1 and Halimah @ Nasibah Ahmad2
1

Faculty of Public Management and Law, 2 Faculty of Accountancy Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia

ABSTRACT
The Asian Financial Crisis in 1997 not only introduced the term of corporate governance but also drew attention of the public about the weaknesses of Malaysian corporate governance practice. After 1998, Malaysian government decided to adopt corporate reform that could enhance the quality of good corporate management practice. This reform is clearly stated in the code and rules of corporate governance. The purpose of this research is to study the significance of implementing the code and rules of corporate governance since the public already realize the close relationship between business and politics. Three companies were chosen as indicators for this study. As a result, it was found that companies which are involved in corporate malpractice but have good relationship with states will always be excluded from the legal corporate action. Keywords: corporate governance, corporate reforms, political economy, state business relation

INTRODUCTION Asian Financial Crisis in 1997 not only introduced the term of corporate governance but also drew attention of the public about the weaknesses of Malaysian corporate governance practice. After 1998, Malaysian government decided to adopt corporate reforms that could enhance the quality of good corporate management practice. This included the introduction of the new Malaysian code and rules for corporate governance. The debate of corporate governance in Malaysia are often limited to agencies involved directly in law enforcement such as the Ministry of Finance, Kuala Lumpur Stock Exchange (KLSE),1 Securities Commission (SC) and Registrar of Company. On

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