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Good Corporate Governance

Good Corporate Governance. Nia Christina 16598. Identification of Role of Social Audit by Stakeholders as Accountability Tool in Good Governance. Theory used by the article : Social audit is evaluation of social performance and its relevance to the felt needs of the society.

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Good Corporate Governance

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  1. Good Corporate Governance Nia Christina 16598

  2. Identification of Role of Social Audit by Stakeholders as Accountability Tool in Good Governance • Theory used by the article: Social audit is evaluation of social performance and its relevance to the felt needs of the society.

  3. Hypothesis of research Actual role of the society and civic engagements as is perceived and expected by stakeholders.

  4. Variable use in research • Transparency and information flow for the stakeholder • Efficiency, effective, and productivity • Governance’s reliability

  5. Method of analysis • Questionnaire is given to check Test and Retest reliability • Using SPSS software to do statistical analysis.

  6. Result of analysis Largest percentage of responses, both during test and retest, are in the “agree” category, those who are agree with the statement given (55.2% during test and 50.4% during retest.)

  7. Conclusion • The majority of responses are toward agreement (65.2% & 62.0%) with the statement which show that majority agreed with the identified roles of social audit. • A large number of responses are also in the undecided / can’t say category (21.7%&21.6%).

  8. The benefit or role areas are: • Stakeholder accepted that social audit helps the government in monitoring, accounting for and reporting the activities/action. • The exercise of social audit improves social, ethical and environmental performance. • Public is concerned and confident that social audit contributes towards achievements of efficacy and effectiveness of the administration. • The important finding was that is creates confidence on governmental action in community. • Make administration more transparent and accountable. • Provide verifiable data to substantiate claims on social performance. • Enhance inclusion, patnershipand participation. • Collectively, social audit is a tool for social accountability in good governance.

  9. The Effect of Board Structure on Shareholders’ Wealth in Small Listed Companies in Malaysia • Theory used by the article Malaysian Corporate Governance Code stated that the best practice in corporate governance is when the board of directors fulfil their responsibility as managers of the company (MCCG 2000)

  10. Hypothesis of research • There is no significant relationship between board size and shareholders’ wealth • There is no significant relationship between board composition and shareholders’ wealth • There is no significant relationship between directors’ remuneration and shareholders’ wealth

  11. Variable use in research • board size • board composition • directors’ remuneration • ROI and EPS.

  12. Method of analysis • Multiple regression analysis was performed to determine whether the effect of the board structure: board size, board composition and directors’ remuneration would remain unchanged.

  13. Result of analysis • Descriptive Statistics of Board Structure The results indicate that the number of directors in a board for all companies on the Second Board is similar, irrespective of the year (mean score: 7.15 in 2002; 7.07 in 2003; 7.13 in 2004). • Descriptive Statistics of Financial Performance The results indicate that most companies in the Second Board failed to realize an adequate return on equity invested by shareholders. The results indicate that most companies in the Second Board have a lower corporate value, an indication that the companies may not be able to sell off their shares easily

  14. The Effect of Board Size and Shareholders’ Wealth Hypothesis 1 that states no significant relationship between board size and shareholders wealth as measured by ROI and EPS is rejected. • The Effect of Board Composition on Shareholders’ Wealth Hypothesis 2 that states no significant relationship between board composition and shareholders wealth as measured by ROI and EPS may be rejected. • The Effect of Directors’ Remuneration on Shareholders’ Wealth Hypothesis 3 that states no significant relationship between directors’ remuneration and shareholders wealth as measured by ROI and EPS is accepted.

  15. Conclusion • The results in this study are consistent to previous studies that show positive relationship between board size on company’s performance • The results showing marginally negative relationship indicate that a higher proportion of executive directors may be crucial in ensuring that all the assets are being utilized efficiently. • This study implicate that a company’s performance does not depend on how much the directors received their compensation but more on the number of directors in a board or the proportion of executive and non-executive directors in a board. • The evidence in this study points to the fact there is a need to monitor and effectively organise the structure of a board to ensure good corporate governance practices is upheld.

  16. THANK YOU

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