Zahiruddin Ghazali

It Pays to Be an Executive in Malaysia

Malaysian corporate sector is characterized by an insider system of corporate governance and induced the alignment problems between majority shareholders and the minority group. This paper investigates if there is an evidence of moral hazard behaviour being practiced in the executive remuneration decision. A match pair methodology is employed to isolate the effect of ESOS adoption from the usual motivations when deciding executive remunerations. Results suggest that while the amount of remuneration is directly linked to size of firms suggesting efficient and rational decision rather than on performance (profitability). The moral hazard behaviour is more evident when firms reward their executives even more in times of lower profitability or more losses over a longer period. The practice is more apparent among family owned firms not adopting ESOS. Though there is evidence of weak monitoring by government, it is not enough to ward off the insider pressures for personal gains.

Effectiveness of board governance and dividend policy as alignment mechanisms to firm performance and CEO compensation

Abstract Purpose: The purpose of the study is to investigate whether operating and market performance are aligned to CEO compensation and how board governance and dividend policy could influence pay–performance link in the capital market of Pakistan. Design/methodology/approach: The hand-collected information on 219 non-financial firms listed on the Pakistan stock exchange (PSX) is acquired over the period 2012–2016. Additionally, panel data technique, namely Prais–Winsten (PCSE) and 2SLS (robust standard errors) regression are applied to account for the heteroscedasticity, serial correlation and endogeneity issue. Findings: The empirical results indicate that CEO compensation is positively associated with operating performance and market performance. The evidence also provides partial support to agency perspective that board independence and optimal board size could positively, while CEO duality negative moderates the relationship between operating performance and CEO compensation. However, none of these mechanisms are proved to be effective in aligning market performance to CEO compensation. In fact, dividend policy negatively moderates the association between firm performance (operating and market) and CEO compensation. Thus, contrary to the agency theory’s proposition, dividend policy cannot be utilized as a substitute control device in the absence of strong corporate governance mechanisms. Practical Implications: In light of this empirical evidence, regulatory bodies in Pakistan could improve corporate governance mechanisms as well as CEO compensation structure to ensure remunerative and ethical financial market. Originality/value: This study contributes to the academic literature by validating the underexplored pay–performance alignment propositions of agency theorists, especially in the reference of Pakistan.

The Determinants of Share Market Response to Employee Share Option Plans Announcements and Implementations: A Review of the Malaysian Bourse

The globalization of society and the economy has had an impact on research and education and been influenced by them. In the case of Malaysia, a liberalized democratic education policy brought a sudden upsurge of foreign students to Malaysia in 1966, when the government introduced the Higher Education Act. Terms such as international education and global education were an expression of this development. To become a major player, however, Malaysia essentially needs to acquire global competencies, in curriculum, administrative ease or pricing, in order to make its location a strategic choice for post-secondary education. The globalization of markets and competition, rapid technological changes and changing relationships between states and firms require different approaches from those traditionally assumed. This chapter proposes the development of a coherent global education model of higher education, based on an eclectic-locational rather than a multidisciplinary approach. Although the first university was established in 1962, foreign student enrolments in Malaysia have only increased rapidly in the last 25 years. The total number increased from 32 in 1970 to 12,605 in 1999. While foreign students still represent less than 2 per cent of higher education enrolments in Malaysia, this proportion is likely to grow over the next decade as university enrolments increase and the government policy of liberalizing higher education continues.