Corporate Governance Case

1. Aim of the study

Corporate governance have become the latest buzzwords in the post millennium concerning companies and today most of the companies have started to include this initiative into their business processes. Okpara (2009) stated that in today’s business world the effective corporate governance had become important to many organization because it will improve managerial skill and knowledge in attracting foreign investments. Today the business owners and managers understands that good corporate governance will give them extensive benefits.

The aim of this study is to grasp a general understanding and effectiveness of corporate governance in one of the government link company in Malaysia which is known as Malaysia Airports Holdings Berhad (MAHB).

1. Introduction

MAHB was incorporated in 1991 after Department of Civil Aviation obtain the approval from the government. After the separation, MAB responsibility is to focus on the operation, management and maintenance of airports. MAHB was incorporated as public limited company in 1991 and subsequently was listed in the Main Board of the Kuala Lumpur Stock Exchange. MAHB becomes the first airport company in Asia to be listed. Since listing, their market capitalisation in March 2015 is RM11.55 billion and total asset as of end December 2014 is RM22.53 billion. Today MAHB has 9,000 employees across Malaysia. Malaysia Airports Berhad (MAB) is a company that manages sixteen domestic airports and eighteen short take-off and landing ports in Malaysia and five international gateways.

Their current corporate structure includes nine operating subsidiaries as listed below:

1. Malaysia Airports (Sepang) Sdn Bhd
2. Malaysia Airports Sdn Bhd
3. KL Airport Hotel Sdn Bhd
4. Malaysia Airports (Properties) Sdn Bhd
5. Malaysia Airports (Niaga) Sdn Bhd
6. MAB Agriculture-Horticulture Sdn Bhd
7. Malaysia Airports Consultancy Services Sdn Bhd
8. Malaysia International Aerospace Centre (MIAC) Sdn Bhd
9. Urusan Teknologi Wawasan Sdn Bhd

1. Literature Review

3.1        Corporate Governance

According to Coleman and Biekpe (2006) and Garg (2007) has attracted attention from many regulators, academicians and practitioners because corporate governance is a tool that enhance investors’ confidence and improves the economic situation of a listed company. La Porta, et al. (2000) defined corporate governance as a set of mechanisms that protects the investors against manipulation of data’s by the insiders. Ruin (2001) states that corporate governance is a group of people getting together as one united body with the task and responsibility to direct, control and rule with authority.