Corporate Performance, Corporate Governance and CEO Dismissal in Malaysia

Objective – This study empirically examines the incidence of CEO dismissal in Malaysian Public Listed Companies (PLCs). Methodology/Technique – Logistic regression is used in this study to estimate the relationship between firm performance, corporate governance and CEO. Findings – Using 44 CEO turnover firms in 2010 among financial and non- financial institution, this study find that the firm performance, board multiple directorship, family ownership and institutional investors influence CEO dismissal. Specifically, firms that have lower performance, have a high proportion of board member multiple directorships and controlled by institutional investors are more likely to dismiss their CEOs. These results imply that poor performance together with board multiple directorship and controlled by large institutional investors are amongst major factor that contribute to CEO dismissal. In contrast, we find CEO dismissal is less likely occurred at firms that controlled by the family. This result may due to large control by family and in some cases the CEOs are among family members. Novelty – This paper study on the type of CEO turnover which segregate the type of turnover into forced and voluntary turnover. This research idea has limited finding globally as previous research on CEO turnover do not separate between forced and voluntary turnover. Type of Paper: Empirical