The appointment of directors and corporate governance in Malaysian firms

Corporate governance in many Asian nations is characterized by close-knit networks among market players. This paper examines the influence of major shareholders in the Malaysian largest publicly listed firms on the governance system of the firm. A survey among the largest listed firms in Malaysia is carried out to shed light on the influence of majority shareholder on directors’ tenure and the association of directors to their firms. Concentrated ownership is found to be entrenched and directors have a close and intimate relationship with firm insiders. This has a serious implication on the implementation and enforcement of good corporate governance system and the development of labour market for professional directors.