Financial Constraints, Executive Compensations and Large Shareholders in Malaysia

25 Pages Posted: 18 Jul 2013

See all articles by Ei Yet Chu

Ei Yet Chu

Universiti Sains Malaysia

Saw-Imm Song

Universiti Teknologi MARA (UiTM)

Date Written: July 1, 2013

Abstract

The study investigates the issues of financial constraints in Malaysia. Using a sample of 196 Malaysian public listed firms, the findings show that generally there is no issue of financial constraints in Malaysia. However, the presence of large shareholder reduces the use of external financing and emphasis on internal cash flow for firms’ investment. The coalition effects of top three large shareholders are found to reduce the dependence on internal cash flow for investment. Moreover, directors’ compensation measured as incentive ratio is found to exuberating investments through internal cash flow and external debt financing.

Keywords: executive compensation, internal financing, financial constraints, investment, large shareholders, Shapley value, emerging market, Malaysia

JEL Classification: G31, G32, G35

Suggested Citation

Chu, Ei Yet and Song, Saw-Imm, Financial Constraints, Executive Compensations and Large Shareholders in Malaysia (July 1, 2013). Available at SSRN: https://ssrn.com/abstract=2295175 or http://dx.doi.org/10.2139/ssrn.2295175

Ei Yet Chu (Contact Author)

Universiti Sains Malaysia ( email )

Graduate School of Business
Universiti Sains Malaysia
Minden, 94300
Malaysia
60165793705 (Phone)
6046532792 (Fax)

HOME PAGE: http://www.gsb.usm.my

Saw-Imm Song

Universiti Teknologi MARA (UiTM) ( email )

Kuala Lumpur
Malaysia
6082677636 (Phone)
6082677200 (Fax)

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