Abstract

Jel classifications

Keywords

1. Introduction

2. Literature review

2.1. Empirical findings on SRI and islamic finance

2.2. Corporate governance, ESG, and performance

3. Data and methodology

3.1. Data and sample

3.2. Empirical models

4. Empirical results and discussions

5. Robustness test

5.1. Split sample based on size

5.2. Split sample based on the period

6. Conclusion and recommendations

Appendix A. Supplementary data

References

Abstract

This study empirically investigates the effect of an Islamic label on environmental, social, and governance (ESG) performance. Islamic firms in Indonesia and Malaysia that are characterized by lower debt and lower non-sharia compliant income and have a higher ethical standard are expected to make a better contribution to the environment and society. Testing firms in Indonesia and Malaysia, two emerging countries in ASEAN (Association of Southeast Asian Nations), reveals a significant difference in overall environmental and social performance, but not in governance quality. Also, the study documents the significant effect on performance of using Islamic criteria for leverage, accounts receivable, and cash. Overall, after controlling for some variables and splitting the sample into different time horizons and firm sizes, the study consistently reveals that firms labeled as Islamic have better environmental and social performance, but not governance performance. The relevant policies should be adjusted.

1. Introduction

Environmental, social and governance (ESG) factors are considered important in fulfilling corporate social responsibility. This also applies to Islamic firms, which must pay greater attention to ESG issues (Bennett & Iqbal, 2013; Masih et al., 2018; Moghul & Safar-Aly, 2014). In 2015, as reported by the Global Sustainable Investment Alliance (2015), approximately $21.4 trillion was invested and managed for socially responsible investment (SRI) purposes in 2014. The assets under management (AUM) increased by over 60 percent with conventional strategies. Europe had the highest cumulative total investment, $13.61 trillion, and the US shows a rapid progression of 74 percent per year even though the benchmark is only 50 percent. Most SRI is by institutional investors, rather than retail investors. However, retail investors are becoming more interested in SRI.

Whether conventional or Islamic, investment strategies depend on two main types of information: fundamental information and technical information. Fundamental information includes financial statements, the rate of firm growth, and key financial highlights of the company, whereas technical information come from the company’s past performance or momentum, depicted in graphs. Although these two types of information remain the most useful for investment, investors seek other ways to distinguish firm performance that does not use a risk and returns perspective, that is, SRI (Erragragui & Revelli, 2016).

Introduction

Literature review

Hypotheses development

Research methodology

Data analysis

Results

Discussion

Theoretical implication

Practical implication

Limitations and suggestions

Conclusion

References

Abstract

Purpose: The objective of this study is to see the mediating effect of innovative culture and organizational learning between leadership styles and organizational performance in Malaysian SMEs. Design/methodology/approach: Questionnaires were used to collect data from owners/managers and 950 questionnaires distributed by using postal and email strategy. Out of 950, only 409 questionnaires returned back, 25 questionnaires have missing values and eliminated from a sample, and only 384 questionnaires were used for final analysis.
Findings: Findings reveal that leadership styles have a significant influence on organizational learning, innovative culture, and organizational performance. Innovative culture and organizational learning have a significant influence on organizational performance. Moreover, innovative culture and organizational learning significantly mediate between leadership styles and organizational performance.
Practical implications: In practical term, the current study contributes for managers/ owners in SMEs to focus leadership styles with innovative culture and organizational learning in their decision making if they want to enhance their organizational performance.
Research originality: This study is one of the pioneer studies that test leadership styles at third-order with the combination of two mediating variables innovative culture and organizational learning with organizational performance.

Introduction

Effective leadership plays an important role to determine the success or failure of any kind of organization (Tourish, 2014). In the last few decades, leadership is the most studied area in business as well as in industry. Moreover, leadership has become a compulsory part for organizations (Bryman, 2007; Brymer & Gray, 2006). Despite the wider quantity of studies on leadership, there has been scant research done on small and medium-size enterprises (SMEs) (Franco & Matos, 2015). A highly competitive market and rapidly changing strategies enhance the importance of leadership in attaining a competitive edge over their competitor through leaders to enhance organizational performance (Jaramillo, Mulki, & Marshall, 2005). The primary purpose of organizations is to focus financial efficiency but also considers their intangible resources and leadership to maintain competitive advantage (Wang, Chich-Jen, & Mei-Ling, 2010). Literature demonstrates that Malaysian SMEs faces issues regarding leadership styles that reduce organization performance (Aziz, Abdullah, Tajudin, & Mahmood, 2013; Hashim, Ahmad, & Zakaria, 2012; Rahim, Zainal Abidin, Mohtar, & Ramli, 2015). Prior studies suggested that effective leadership can help to improve the organizational performance in that situation where organizations face a lot of new issues and challenges (Franco & Matos, 2015; McGrath, Mac Grath, & MacMillan, 2000). Leadership styles have an influence on both individual and organizational performance (Wang et al., 2010; Windsor, 2009). Sometimes firms do not identify the ineffective or effective leaders until time passed and organizations suffer (Nazarian, Soares, & Lottermoser, 2017). Leadership styles are a vital element that explains organizational performance. Hence, this study focuses on leadership styles to determine SMEs performance.

This study develops and tests a research model to analyze the overall effects of minimum wage policy implementation on hotel employees’ overall perception of the minimum wage policy in relationship to satisfaction with compensation, work behaviors, and perceived quality of life. An electronic survey was developed, and data were collected from hotel employees who worked at three-, four-, and five-star hotels in Malaysia. Results from the structural equation modelling analysis and the bootstrap mediational effects analysis offered significant empirical findings that will enable understanding of the overall effects of minimum wage increases on Malaysian hotel employees. Employee perception of minimum wage policy significantly influenced their satisfaction with compensation and work motivation. Additionally, employee satisfaction with compensation significantly influenced their work motivation, job satisfaction, and perceived quality of life. Limitations and future research directions are discussed.

Introduction

In 2009, the Ministry of Human Resources Malaysia found 40% of private sector employees had incomes below the poverty level (Guie, 2012). Knowing that the poverty rate could be reduced by increasing employee income (Yusof et al., 2016), Malaysia government took steps similar to other countries and implemented a minimum wage policy in 2013. The policy was implemented throughout all businesses and was set monthly at RM900 (USD215) for Peninsular Malaysia and RM800 (USD191) for other regions (Attorney General’s Chambers of Malaysia, 2012). In 2016, the monthly minimum wage was increased by 10% to RM1,000 (USD236) for Peninsular Malaysia and RM920 (USD217) for other parts of Malaysia (Attorney General’s Chambers of Malaysia, 2016). Given the National Wages Consultative Council (NWCC) review of the Minimum Wages Order of 2016 and current economic conditions, another increase in the minimum wage (RM1,100 per month) started January 2019; this rate was standardized throughout the country (Attorney General’s Chambers of Malaysia, 2018). The minimum wage policy objectives in Malaysia include assuring basic needs of employees and their families are met and giving social protection to employees through minimum acceptable wages (http://minimumwages.mohr.gov. my/). The minimum wage policy aims to improve the living standards of Malaysian and non-Malaysian employees and reflects the Malaysian government’s commitment to overcoming poverty.

Few articles have focused on the green aspect of intellectual capital namely green intellectual capital. Nowadays, due to increasing concerns regarding environmental issues, it is essential to investigate the effects of green intellectual capital on organisational sustainability. Hence, this study examines the linkage between the dimensions of green intellectual capital (green human capital, green structural capital, and green relational capital) and business sustainability. Data were gathered from 168 manufacturing small medium enterprises (SMEs) in Malaysia, and analysed using the Partial Least Squares approach. The results show that green structural capital and green relational capital have positive relationship with business sustainability, while green human capital did not. Finally, the implications and limitations of this study were discussed and the recommendations for future studies presented.

Introduction

Sustainability has become a topic of interest for both academics and practitioners. A wide discussions and debates about the concept of sustainability, its important and the way to achieve it are pervasive. The economic profits of business activities have increased prosperity and living conditions globally; however it leads to environmental destruction and social inequality directly and indirectly (Sullivan et al., 2018). Current research by Gong et al. (2018) showed that many environmental destructions occurred and an estimated 60% of the ecosystems worldwide have been degraded. If nothing is done to solve this, environmental problems will continue to increase and it will worsen. However, most of the organisations claim that these environmental corruptions are not caused by their business activities and see it as the issue to be ignored. Besides that, not all organisations were up on the idea of sustainability. In fact, business landscapes are now different than before with limitation of resources, increasing rates in technology, emerging markets and new business models disruptions for conventional method (Sullivan et al., 2018). The term sustainability was first applied to in dealing with natural environment degradation and its negative impact on human health, social well-being and economic growth. The definition from World Commission on Environment and Development (WCED, 1987) points out that sustainability is the “development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs” which commonly and widely used in literature and can be applied to these three composite outcomes namely economic, social and environmental.

The panic wrought by the 1997 Asian financial crisis spurred different mitigative measures. Some states assented to IMF bailout and restructuring, while others enforced capital control. Since then, despite intense academic and regulatory scrutiny of the nuances of the recession, empiric focus on recovery trajectory of affected countries centred chiefly around traditional GDP metrics; an approach that disregards economic performance in a manner congruent with Sustainable Development Goals (SDG). In this paper, we adopt a broader SDG-compatible approach by tracking two affected countries’ (Korea and Malaysia) recovery via operationalizing an alternative growth indicator GPI (Genuine Progress Indicator). First, we construct a 35-year long GPI index from 1980 to 2014 and employ the Solow Growth Model to measure the impact of the two remedial measures on GDP and GPI of both countries. Employing an ARDL approach, we find external debt to impact significantly the GDP and GPI of Korea. Meanwhile for Malaysia, the controversial capital control failed to register significant impact. Moreover, unemployment rates, trade openness, fixed capital formation and the history of previous crises are found to be influential determinants of GDP and GPI, with credit and exchange rate variables showing ambiguous results.

Introduction

In the mid-1990s, a collapse of Thai Baht precipitated a cascade of currency collapses, culminating in a full-blown economic crisis in the South-East and East Asian regions. Ever since, this crisis has remained significant for academics and policymakers owing to its sudden trigger, rapid percolation, and varied consequences. For economists concentrating on crises, the 1997 crisis also serves as an epicentre for tracking crisis management schemes and recovery trajectories. In this regard, two economiesdMalaysia and Koreadstand out as candidates for deeper investigation due to disparate recovery paths undertaken. The former imposed hard capital controls, while the latter acceded to IMF bail-out and restructuring. Since then, both economies performed impressively. Measurements of recovery over these periods have largely centred around economic growth metricsdmost specifically medium-term rates of GDP growth within a decade (Corden, 2007; Zumkehr and Andriesse, 2008). This traditional usage of GDP as the chief marker of economic growth and success has come under criticisms lately. Scholars concerned with Sustainable Development Goals (SDG) criticize the GDP approach arguing that a policy of targeting GDP-centred growth leads to degradation of the environment, broadens wealth inequality, and results in distorted social dynamics (Philipsen, 2015; Pintner et al., 2012; Van den Bergh, 2009).

Since 1990s Malaysia aspired to make biotechnology and bioeconomy as her engines of economic growth to utlise the abundance of natural resources and biodiversity. The public sector plays an integral role in developing the sector and various incentives are in place for the private sector to be actively involved and to forge collaboration with the public sector. The country launched its National Biotechnology Policy in 2005 and later launched its National Bioeconomy Programme in 2010 to become the first country in South East Asia and second in Asia after China to have such an initiative. Malaysia is also very proactive in its biosafety law and regulations and has most of the related legal instrument in place. A lot of success has been recorded since the inception of the National Biotechnology Policy in terms of job creation, contribution to GDP through biobusinesses and investment from foreign companies, but the sector is not spared from challenges too. Due to the nature of the discipline that is multidisciplinary and that requires huge amount of investment, expertise and political will, there are a lot of barriers before the country emerges as a bioeconomy player. This paper discusses the public policies, initiatives and funding mechanisms in place in Malaysia that drive its research, development and commercialisation in the area of biotechnology and bioeconomy. The authors also discuss the challenges faced in Malaysia in implementing the policies.

The government’s biotechnology agenda: a historical background

The biotechnology initiatives in Malaysia commenced in mid 1990s where the government committed significant amount of investment, time and energy to make the country an international biotechnology hub. The biotechnology agenda was developed to capitalise Malaysia’s rich natural resources and biodiversity and turn them into biobusiness and wealth. Historically, Malaysia has been actively pursuing agricultural research through a number of world recognised research institutes to promote higher yield and better quality of rubber, oil palm and agricultural commodities [1]. The country also boasts a strong manufacturing sector with the presence of multinational companies. These were seen as a pre-requisite to build the biotechnology sector. The modus operandi to make the country a biotechnology hub might have changed due to change in leadership in early 2000, but the commitments remained strong which is seeing various initiatives being rolled out by the government to strengthened biotechnology and bioeconomy to make these the pillars of economic engine. In Malaysia, government institutes and agencies continue to play a central role in accelerating the biotechnology and bioeconomy agenda.

There is a lack of conceptual models that explain the relationship among critical success factors, internal control and safety performance, especially in the manufacturing sector of Malaysia. The enforcement of internal control is linked to safety performance, and more research is needed to validate this relationship. Unless management identifies the critical success factors that have significant impact on safety and health, safety management systems such as OHSAS 18001 compliance auditing will have little impact on organizations’ safety performance. This study measured organizations’ perceptions on six critical success factors and enforcement of internal control by conducting a survey using a questionnaire given to 300 organizations in Malaysia’s manufacturing sector. Hundred and five organizations participated in this survey with a response rate of 35 percent. The reliability and validity of all the scales were found acceptable. The internal control was found to be the key mediator in the relationship between critical success factors and safety performance. Path analysis using Partial Least Squares (PLS) version 2.0M3 showed that Management Commitment, Employee Involvement, Safety Training and Government Regulation are related with Safety Performance through enforcement of internal control. This study emphasizes the need for enforcement of internal control to achieve outstanding safety performance.

Introduction

Manufacturing industry in Malaysia is among the most hazardous industries due to its unique nature. Factory workers are required to have some basic safety awareness to be sensitive to potential hazards in their workplace. Gherardi and Nicolini (2000) observed that knowledge is handed down from one generation of workforce to another. Therefore, unsafe acts and unsafe conditions any working culture comprises are also passed down, and slowly become part of the organizational culture. In a manufacturing line, the conveyor belting, lifting of materials, performing repetitive work—either standing or sitting throughout the shift, usage of forklifts, and working with machineries are some of the significant sources of potential accidents to workers, if these aspects are not properly supervised and controlled. Furthermore, the attitudes and practices involved in rushing to meet aggressive customer deadlines and attempts to maximize productivity have made manufacturing companies very hazardous workplaces. Workplace accidents result in losses to the economy of Malaysia. Based on Malaysia Social Society Organization (SOCSO) annual report 2012, the statistics showed that the direct cost of accidents amounts to RM 2.02 billion, which is about 0.5 percent of Malaysia Gross Domestic Product (GDP); indirect costs could be much higher (Social Security Organization, 2012). It was an increase of 16.91 percent from the 2011 benefit payment (RM 1.7 billion) (Social Security Organization, 2011) while the figure in 2013 further experienced another 11 percent increase from the figure reported in 2012, amounting to RM 2.2 billion in losses (Social Security Organization, 2013). The recent statistics indicate that the figure in 2014 has seen an 11.2 percent increase from the figure reported in 2013, amounting to RM 2.4 billion in losses (Social Security Organization, 2014). Such an increase in compensation indicates that working conditions in Malaysia have not improved to such a degree as to significantly reduce workplace accidents. According to Biggs et al. (2005), manufacturers tend to have a low awareness of implementing long-term safety practices, and safety issues usually receive the least priority due to cost control. It is similar in Malaysia where employers were constantly reminded not to implement cost cutting measures at the expense of their employees (‘‘Don’t cut costs at expense of safety, companies told”, 2015). An effective safety management system is understood as a set of critical success factors associated with safety, health programs, and activities (Kirwan, 1997).

1- INTRODUCTION

2- LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

3- DATA, METHOD AND VARIABLES

4- RESULTS

5- DISCUSSION

6- CONCLUSION

REFERENCES

Abstract

The purpose of this paper is to investigate the factors that influence Malaysian manufacturing sector investment in accounts receivable, an asset seen by many as one of the riskiest in any company’s balance sheet. We test several theories, related to accounts receivable, using a cross-section of 262 listed manufacturing firms over a period of five years (2007-2011). Both fixed and random effect approaches are considered to deal with potential heterogeneity across firms. Our results show that the absolute level of accounts receivable is almost exclusively explained by size. However, the ratio of accounts receivable to assets is influenced by firm size, short-term finance, sales growth, and collateral. Profit, liquidity and gross margin have no role in affecting the decision to grant trade credit to customers. Some of our results are mostly inconsistent with previous studies. Size and short-term finance have a negative, rather than a positive, impact. Liquidity and gross margin have no, rather than a positive, effect. Profit and sales growth are expected to exhibit a U-shaped relationship with investment in accounts receivable. We found, however, that the former is insignificant while the latter is strictly increasing. The only factor found to be consistent with prior studies, in developed counties, is collateral. Our findings have important implications for policy makers in Malaysia and other emerging economies, especially in the light of the forthcoming International Financial Reporting Standard 9.

Introduction

Accounts receivable (AR) occur when suppliers of goods and services1 sell on credit and thus allow their customers to defer payment to a later date. This type of credit is granted by firms whose primary business is to sell goods, rather than to provide finance to customers. Sale on credit creates AR, a current asset in the balance sheet of suppliers. Thus AR are the amounts outstanding payable by customers to their suppliers. Given the high volume of sales on credit between businesses, AR are especially high and are considered by many as the riskiest asset in a firm’s balance sheet (Pike and Cheng, 2001; Wilson and Summers, 2002; Boden and Paul, 2014). There has been sustained interest in managing the level of AR from both academics and practitioners, each emphasising the permanent character of this short-term but continuously renewed investment and its strategic potential due to the existence of financial, tax-based, operating, transactional and pricing motives (Asselbergh, 1999; Paul and Boden, 2008). Increasingly, the focus has shifted to the efficiency of AR management and its relationship with profitability, in both developing and developed countries (see, for example, the studies of Michalski (2012) in Poland; Raheman, and Nasr (2007) in Pakistan; Gill, Biger, and Mathur (2010) in the USA; Singh, Kumar, and Colombage (2017) in India). However, whilst there is ample evidence as to why companies in developed countries continue to invest in AR, it is not clear whether firms within the developing world have a similar experience.2 Orobia, Padachi and Munene (2016) observe that the most frequently performed routines relate to safeguarding cash and inventory, and to credit risk assessment. Payment management routines are the least performed. This suggests that firms in emerging countries may face difficulties in managing their extended credit.

1- Introduction

2- In writing a research undertaking

3- In gaining acceptance of a research undertaking

4- In situating the self in the research context

5- In the renegotiation of the research context

6- A reflection of self-reconstruction and communication

7- Contribution to accounting research and conclusion

References

Abstract

Purpose: The purpose of this paper is to engage, cooperate and communicate for a more visible form of research accounting in early research settings, especially by those in non-native English speaking and developing nations.

Design/methodology/approach: The paper highlights four early research settings: in writing a research undertaking, in gaining acceptance of a research undertaking, in situating the self in the research context and in the renegotiation of the research context.

Findings: The paper finds that although organisations offer a forum for a discussion of socialising form of accounting, organisational communication inverts many of the norms of academic etiquettes. It interrupts, takes statements out of context and challenges the academic claim of accounting as a language of business.

Introduction

Self-reconstruction has significant ground for the development of accounting as a field of inquiry. Literature in self-reconstruction provides rich insights into social investigations, which includes inquiries into professional values and the career roles of accountants (Parker and Warren, 2017), organisational identity (Taylor and Scapens, 2016) and accounting changes (Liguori and Steccolini, 2011). This is particularly true in organisations as the place where high levels of self-concern, materialism and self-centeredness drive accounting (Ma et al., 2015; Overall, 2016). Despite an extensive coverage of self-reconstruction in organisational accounting studies, there remains little detailed empirical work on the researcher-institution communication relationship especially concerning accessing an organisation for research inquiries. Early research inquiries or settings require effective communication, especially with interpersonal strategies. It begins by seeking a place for research, followed by identifying and securing respondents and ending with self-adjustment to accommodate the work environment and culture. For a researcher who views accounting in idea and perspective, and organisational communities who understand accounting in practice, self-reconstruction and personal communication are not simple.

Purpose – The purpose of this paper is to understand and explain the financial disclosure processes among Malaysian local authorities (MLAs). Design/methodology/approach – Employing semi-structured interviews, data were collected from 26 members in five case study organisations, and interpreted using Gibbins et al. (1990, 1992) framework of financial disclosure. Findings – The study finds that financial disclosure is influenced by a hierarchical structure consisting of accountants, the Financial Accounts Committee, the mayor and other managers. The decision to disclose or not disclose was influenced by how sensitive the issue was. External auditors and mediators influenced both the identification of issues, disclosure position and disclosure output. Though there are many laws governing financial accounting, MLAs opportunistically chose to apply the Federal Treasury Circular largely because the external auditors used it. Research limitations/implications – This study contributes to the literature by illuminating who makes disclosure decisions, what influences these decisions and how. The study reveals hitherto un-researched contextual factors that affect disclosure, namely, religion and external auditors and the opportunistic choice of which laws and regulations to apply in financial disclosure. Future studies might want to apply this approach in other contexts to see what we can learn from them. Originality/value – Using case studies in the study of financial disclosure provided valuable insights into the complex and multi-dimensional phenomenon of financial information disclosure. The application of Gibbins et al. (1990, 1992) framework in the public sector and in Malaysia is novel.

Introduction

This study investigates the processes of financial disclosure among Malaysian local authorities (MLAs). Financial disclosure refers to “any deliberate release of financial information, whether numerical or qualitative, required or voluntary, or via formal or informal channels” (Gibbins et al., 1990, p. 122). Studies investigating disclosure practices in the public sector have mostly focussed on the incentives for disclosure of financial information (e.g. Perez et al., 2008; Laswad et al., 2005); or on disclosure quality (Robbins and Austin, 1986). There is, however, paucity of studies that examine the organisational, social and environmental context within which financial disclosure occurs (Gibbins et al., 1990; Adams, 1997; Hopwood, 2000; Carpenter and Feroz, 2001). Those which have sought to address this issue have approached it from outside the context in which disclosure decisions are made by analysing financial reports, surveys or websites and speculating how the factors they study might have affected financial disclosure decisions (e.g. Garcia and GarciaGarcia, 2010). Who makes particular disclosure decisions and the range of influences on this decision process is an empirical question that this study seeks to answer. Furthermore, most previous studies have been conducted in western countries (e.g. Garcia and Garcia-Garcia, 2010; Laswad et al., 2005; Robbins and Austin, 1986; Serrano-Cenca et al., 2016). Little attention has been devoted to the issue of accounting disclosure in local governments in South East Asian countries (see exceptions Coombs and Tayib, 1999; Ghani and Said, 2010; Tooley et al., 2010a, b). Those studies which have been undertaken have not addressed how MLAs arrive at the information in the annual reports (Coombs and Tayib, 1999) or websites (Ghani and Said, 2010) that they analyse. This study was undertaken within the context of Malaysia, a rapidly emerging economy, and specifically on local authorities. Focus on public sector financial disclosure in Malaysia is thus timely because this sector has been criticised as inefficient, unaccountable and corrupt (Siddiquee, 2006; Tooley et al., 2010a, b; The Sun, 2006). But at the same time, the country has embraced new public management (NPM) reforms (Hood, 1995) which implies adoption of private sector-like practices in the public sector (Abdul Khalid, 2008)[1].

Purpose – The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate governance score that captures both internal monitoring mechanisms (board of directors’ characteristics, audit committee’s characteristics and internal audit function) and external monitoring mechanism (audit quality). Design/methodology/approach – The study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression and several estimation methods such as two-stage least squares using instrumental variables (IV-2SLS) and dynamic GMM are employed. Findings – This study finds a significant positive association between corporate governance effectiveness and stock market liquidity. The finding is robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias. Research limitations/implications – This result implies that the firms with effective monitoring mechanisms mitigate information asymmetry which leads to less adverse selection problems among traders. Practical implications – This study provides implications for regulators to help design regulations that enhance stock market liquidity. This study could also help investors and traders to formulate their trading decisions, and enables firms to know the importance of strengthening the corporate governance monitoring mechanisms. Originality/value – This study constructs a corporate governance effectiveness measure by combining both internal and external monitoring mechanisms. These mechanisms have not been constructed together in one score in the corporate governance literature and the impact of internal audit function, as an internal monitoring mechanism on liquidity, has yet to be examined.

Introduction

Stock market liquidity is a key factor for well-functioning stock markets due to its important repercussions for several parties. Having a liquid market is essential either for developed and emerging countries, as a highly liquid market means efficient allocation and a tool for economic growth (Bencivenga et al., 1996; Levine, 1991). Liquidity is a critical pre-condition for financial market growth and development (Wang, 2013). One of the issues that have been examined in terms of liquidity is corporate governance, in that effective corporate governance is a crucial for enhancing the investors’ confidence and broadening and deepening the capital market. Effective corporate governance serves to protect the shareholders’ rights by mitigating perverse insider behavior. It is recognized that developed and developing countries are introducing corporate governance reforms. However, empirical evidence about the impact of corporate governance on stock market liquidity is still limited. For developed countries, a study done by Chung et al. (2010) in the USA examined this relationship and found that highly effective governance leads to high stock liquidity. A recent study by Ali et al. (2016) examined the association between corporate governance quality and stock liquidity among Australian firms. However, their findings are based on the four dimensions of corporate governance, namely, board quality, audit committee, nomination committee and remuneration committee. Their study ignores IAF and audit quality as monitoring mechanisms which are more related with financial reporting quality than nomination committee and remuneration committee. In Karmani et al.’s (2015) study, the corporate governance effectiveness was found significantly associated with the stock market liquidity of French firms. However, the index included only four themes, namely, board of directors, audit quality, ownership structure and the disclosure of information. This means that IAF has been ignored also in Karmani et al.’s (2015) study. Furthermore, one of the key dimensions used to construct the corporate governance index in Chung et al.’s (2010) study is the antitakeover provisions. This dimension is not applicable for the Malaysian context as Malaysian firms have few antitakeover provisions available to them. Thus, their findings may not be generalizable to an emerging country, like Malaysia because of several regulatory and institutional differences. Malaysia also has underdeveloped equity markets, which are typified by unique characteristics, such as high agency problems (Kallunki et al., 2007); high earnings management practices (Abdul Rahman and Haneem Mohamed Ali, 2006; Al-Jaifi, 2017); poor information environment (Ball et al., 2003); high ownership concentration (Claessens et al., 2000; Tam and Tan, 2007); and high insider trading (Ali et al., 2011).

1. Introduction

2. Methods

3. Results

4. Discussion

Acknowledgements

References

Homestay operators in Malaysia have long been pursuing their homestay program assisted by the government and their respective communities. However, the homestay operators are still confronted with issues such as the declining number of tourist arrivals which could not generate additional income as expected. This has created other problems such as low commitment level among themselves. Therefore, this study was undertaken to identify the determinants that affect the commitment among homestay operators in Malaysia such as quality of life attributes, attitudes, community roles and the role of government. This study used a survey method using a questionnaire involving 394 homestay operators throughout Malaysia. The study population comprised of 3,211 homestay operators who were registered with the Ministry of Tourism Malaysia as at December 2011. The sample was selected using probability sampling method through multistage cluster sampling procedure. A total of 396 questionnaires were distributed using face to face method but only 337 questionnaires were used for purposes of data analysis. The finding showed that the level of commitment among homestay operators was moderate. The four determinants of the study namely quality of life attributes, attitudes, role of community and the role of government have had positive relationships and become significant predictors to the commitment of the homestay operators in Malaysia.

Introduction

Definition and concept of commitment contains a lot of meaning and perception of each perspective. The concept of commitment in the workplace still a challenge and frequently reviewed, particularly in the areas of management, organizational behavior and human resource management (Cohen, 2003; Somers, 2009). Although many researchers highlight the various definitions as described by Iverson (1996), but the researchers formulated two main things i.e. the commitment of treatment and committed attitude of commitment. According to Porter, Steers and Boulian (1974) organizational commitment is a commitment of the workers to their organizations through the three main components of trust and acceptance of organizational goals, willingness to serve the organization and a strong desire to be part of the organization concerned. An employee who has a strong commitment and willing to sacrifice his/her time and energy tend to remain with the organization in an effort to help realize the objectives and goals of the organization (Brewer, 1996; Yusnita, Wan Abdul Aziz, Mohd Shaladdin, & Yahaya, 2012). According to Mowday, Steers and Porter (1979) organizational commitment means the strength of a person’s identity and involvement in the organization that they join. It can be categorized into three related factors, namely 1) a strong belief and acceptance of the values and goals of the organization; 2) the ability to increase the capacity of the organization concerned; and 3) a strong desire to maintain membership in the organization. Therefore, commitment is the active involvement of the individual in the organization of their choice and are willing to take the time and energy to ensure the welfare of the organization. Another alternative view put forward by Meyer and Allen (1993) stated that the commitment is divided into three main components i.e. affective commitment, continuous commitment and normative commitment.