Investigating the Relationship of Corporate Cash Holdings, Corporate Governance, and Firm Performance in Malaysia

Malaysian Code on Corporate Governance

Malaysian Code on Corporate Governance (MCCG) introduced in 2000 is comprised of a set of best practices anchored on accountability and transparency aimed to strengthen the corporate culture (Securities Commission of Malaysia, 2017). The introduction of MCCG is also aimed to promote ethical behavior, improve accountability and transparency, develop sustainability, eliminate inefficiency, and abolish corporate fraud among Malaysian firms. To ensure that the MCCG remains relevant and is aligned with globally-recognized best practices and standards, it is reviewed periodically by a group of experts.

The recommendation set out in MCCG is divided into three parts. The first part is onboard leadership and effectiveness, which outlines a company board’s responsibilities, composition, and remuneration. The second part of the MCCG outlines the effective audit and risk management of a firm, which includes requirements for the audit committee as well as risk management and internal control framework. In the last part of the MCCG, the outline of integrity in corporate reporting and meaningful relationships with stakeholders is provided (Securities Commission of Malaysia, 2017).