Socioemotional Wealth and Firms’ Control: Evidence from Malaysian Chinese Owned Companies

Chin Fei Goh; Amran  Rasli; Owee Kowang Tan; Sang Long  Choi

Chin Fei Goh Universiti Teknologi Malaysia
Amran Rasli Universiti Teknologi Malaysia
Owee Kowang Tan Universiti Teknologi Malaysia
Sang Long Choi Universiti Teknologi Malaysia

Keywords: corporate governance, Malaysian stock exchange

Abstract

This paper explores how the preservation of socioemotional wealth can be manifested in the control and corporate governance of Malaysian Chinese firms. Using panel data from the Industrial Products index of the Bursa Malaysia (the Malaysian stock exchange) during 2003-2006, we show that the ingrained ‘life-raft values’ among overseas Chinese entrepreneurs can be associated with the preservation of their socioemotional wealth, and thus they prioritize control over their firms. Additionally, we confirm the monitoring role of non-dominant large shareholders in reducing the families’ influence in managing and enhancing their firms’ performance. Specifically, control contestability exercised by the non-dominant large shareholders mediates the relationship between a family’s involvement in management and their firm’s performance.

Author Biographies

Chin Fei Goh, Universiti Teknologi Malaysia

Senior Lecture at the Faculty of Management, Universiti Teknologi Malaysia. He earned his Ph.D in Management (2014) from Universiti Teknologi Malaysia, Malaysia. His M.Sc. in Finance (2011) from Göteborgs Universitet, Sweden; and his M.Sc. in Business Administration (2011) from Blekinge Tekniska Högskola, Sweden. His areas of expertise are Corporate Governance, Corporate Valuation, Corporate Disclosure, Strategic Management, Technology Management, Financial Markets, Economics

Amran Rasli, Universiti Teknologi Malaysia

Professor at Faculty of Management, Universiti Teknologi Malaysia. He earned his Ph. D. in Society, Business and Globalisation (2005) from Roskilde University, Denmark; and his M.B.A. (1985) from Central Missouri State University, USA. Some his writings published in several international journals.

Owee Kowang Tan, Universiti Teknologi Malaysia

Senior Lecturer at Faculty of Management, Universiti Teknologi Malaysia. He earned his Ph.D. in Management (2012); his Master of Management in Technology (2009) from the same university. He has publications in several international journals.

Sang Long Choi, Universiti Teknologi Malaysia

Senior Lecturer at International Business School, Universiti Teknologi Malaysia. He earned his Ph.D. in Management (2011) and his Master in Technology Management from Universiti Teknologi Malaysia. His research interests are Management, Organizational Behaviour & Human Resource Management. He has publications in several international journals.

References

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