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The Impact of Firm’s Level Corporate Governance on Market Capitalization
Journal of Investment and Management
Volume 4, Issue 4, August 2015, Pages: 119-131
Received: Jul. 16, 2015; Accepted: Jul. 29, 2015; Published: Aug. 11, 2015
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Authors
Md Shamimul Hasan, Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia
Normah Omar, Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia
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Abstract
The examination of the influence of firm’s level CG on market capitalization is potentially important for managers to improve CG system in context of Bangladesh. The linear relationship between CG and market capitalization is recognized at one percent level of significance. A positive and significant relationship between board independence and market capitalization is identified. On the other hand, a negative and significant relationship between public ownership and market capitalization is detected by the model. The present practice of CG does not capable to bring back the eroded confidence of external shareholders. The study recommend some steps for improve the situation such as at least two independent directors or one-third whichever is higher, mandatory training for directors to improve their mindset, introduce audit review system, introduce VFM review mechanism, establishing a high powered financial reporting council (FRC) and so on.
Keywords
Corporate Governance, Market Capitalization, Board Independence, Family Ownership, Capital Market
To cite this article
Md Shamimul Hasan, Normah Omar, The Impact of Firm’s Level Corporate Governance on Market Capitalization, Journal of Investment and Management. Vol. 4, No. 4, 2015, pp. 119-131. doi: 10.11648/j.jim.20150404.14
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