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The Impact of Firm’s Level Corporate Governance on Market Capitalization

Received: 16 July 2015     Accepted: 29 July 2015     Published: 11 August 2015
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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.

Published in Journal of Investment and Management (Volume 4, Issue 4)
DOI 10.11648/j.jim.20150404.14
Page(s) 119-131
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Corporate Governance, Market Capitalization, Board Independence, Family Ownership, Capital Market

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  • APA Style

    Md Shamimul Hasan, Normah Omar. (2015). The Impact of Firm’s Level Corporate Governance on Market Capitalization. Journal of Investment and Management, 4(4), 119-131. https://doi.org/10.11648/j.jim.20150404.14

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    ACS Style

    Md Shamimul Hasan; Normah Omar. The Impact of Firm’s Level Corporate Governance on Market Capitalization. J. Invest. Manag. 2015, 4(4), 119-131. doi: 10.11648/j.jim.20150404.14

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    AMA Style

    Md Shamimul Hasan, Normah Omar. The Impact of Firm’s Level Corporate Governance on Market Capitalization. J Invest Manag. 2015;4(4):119-131. doi: 10.11648/j.jim.20150404.14

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  • @article{10.11648/j.jim.20150404.14,
      author = {Md Shamimul Hasan and Normah Omar},
      title = {The Impact of Firm’s Level Corporate Governance on Market Capitalization},
      journal = {Journal of Investment and Management},
      volume = {4},
      number = {4},
      pages = {119-131},
      doi = {10.11648/j.jim.20150404.14},
      url = {https://doi.org/10.11648/j.jim.20150404.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20150404.14},
      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.},
     year = {2015}
    }
    

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  • TY  - JOUR
    T1  - The Impact of Firm’s Level Corporate Governance on Market Capitalization
    AU  - Md Shamimul Hasan
    AU  - Normah Omar
    Y1  - 2015/08/11
    PY  - 2015
    N1  - https://doi.org/10.11648/j.jim.20150404.14
    DO  - 10.11648/j.jim.20150404.14
    T2  - Journal of Investment and Management
    JF  - Journal of Investment and Management
    JO  - Journal of Investment and Management
    SP  - 119
    EP  - 131
    PB  - Science Publishing Group
    SN  - 2328-7721
    UR  - https://doi.org/10.11648/j.jim.20150404.14
    AB  - 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.
    VL  - 4
    IS  - 4
    ER  - 

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Author Information
  • Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

  • Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

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