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    NUR FARAH ALIAH RAMLAN
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    The 1997 East Asian financial crisis had a devastating impact on Malaysian businesses and the economy. One-tenth of publicly traded companies on Bursa Malaysia were insolvent after the crisis. Weak corporate governance and risk management were major contributors to companies' downfalls, resulting in severe corporate governance issues. Previous studies also found that East Asian companies' operational performance was not as strong as believed, and their financial structures could not withstand the economic shocks of the crisis. In response, the Malaysian government introduced the Capital Market Master-plan and the Malaysian Code on Corporate Governance 2000 to address governance issues and establish risk management as a key board responsibility, which were seen as contributing factors to the 1997 crisis.

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    The 1997 East Asian financial crisis had a devastating impact on Malaysian businesses and the economy. One-tenth of publicly traded companies on Bursa Malaysia were insolvent after the crisis. Weak corporate governance and risk management were major contributors to companies' downfalls, resulting in severe corporate governance issues. Previous studies also found that East Asian companies' operational performance was not as strong as believed, and their financial structures could not withstand the economic shocks of the crisis. In response, the Malaysian government introduced the Capital Market Master-plan and the Malaysian Code on Corporate Governance 2000 to address governance issues and establish risk management as a key board responsibility, which were seen as contributing factors to the 1997 crisis.

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    Download as DOCX, PDF, TXT or read online from Scribd
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    5 views1 page

    2.0 Intro

    Uploaded by

    NUR FARAH ALIAH RAMLAN
    The 1997 East Asian financial crisis had a devastating impact on Malaysian businesses and the economy. One-tenth of publicly traded companies on Bursa Malaysia were insolvent after the crisis. Weak corporate governance and risk management were major contributors to companies' downfalls, resulting in severe corporate governance issues. Previous studies also found that East Asian companies' operational performance was not as strong as believed, and their financial structures could not withstand the economic shocks of the crisis. In response, the Malaysian government introduced the Capital Market Master-plan and the Malaysian Code on Corporate Governance 2000 to address governance issues and establish risk management as a key board responsibility, which were seen as contributing factors to the 1997 crisis.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Introduction

    It is generally accepted that the 1997 East Asian financial crisis left scars on Malaysian businesses
    and the economy as a whole. In their research, Jin (2001) estimated that one-tenth of Bursa
    Malaysia's 800 publicly-traded companies were insolvent. It had a devastating impact on the
    corporations, and weak corporate governance and risk management were recognised as major
    contributors to their downfall. This resulted in severe corporate governance issues among Bursa-
    listed corporations.

    An earlier study by Claessens, Djankov, and Lang (1998) also views that much of the

    East Asian financial crisis has in part been attributed to the weak performance and

    risky financial structures of corporations itself. Their study reveals that operational

    performance of East Asian corporates was indeed not as phenomenal as many had

    thought with investment with risky projects/ventures. Moreover, their study also

    suggest that the financial structures of many East Asian corporates could not withstand

    the combined shocks of increased interest rates, depreciated currencies, and large

    drops in domestic demand as where the trigging factor of the 1997 Crisis. Finding from

    their study is further supported by Poon (1999) specifically to Malaysian financial and

    economic condition.

    Malaysian government in March 2000, through its financial regulator formularizes and

    introduces The Capital Market Master-plan to stamp out governance woes which were

    viewed to be the culprit to the 1997 crisis. Apart from the Master-plan, the Malaysian

    Code on Corporate Governance 2000 (MCCG 2000) was also introduced where risk

    management for the first time was clearly stated and viewed as one of the principal

    responsibilities of the board of directors

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