Corporate Governance In Malaysia

            In understanding what corporate governance is about, it would be beneficial to look into the past to observe the introduction and development and of corporate governance practices.
             It could be said that the practice of some form of corporate governance has been in existence from the on-set of the industrial revolution when companies were established for the production of goods. This was the age of Adam Smith's "Wealth of Nations" which touched briefly on the social responsibility of the corporation in the eighteen century. However, it was only until the 1990's that the issues of corporate governance gained greater awareness and importance. This was in reaction to the financial scandals and corporate failures following the effects of the economic crisis. The history of a formal code of corporate governance is traced back to 1991 in the UK when the Cadbury Committee was established with the objectives of raising the standards of corporate governance and the level of confidence in financial reporting and auditing. Hence, the Cadbury Code was formed, setting out clearly, the respective responsibilities of those involved and what is expected of them. Here, an emphasis on the role of the board of directors stands as the central recommendation of the committee.
             In Malaysia the evolution of businesses many of which had origins of being family-owned into public listed corporations gave rise to the increasing importance of corporate governance. As the country gears itself to achieve a developed and industrialised nation status by year 2020 (Vision 2020), the corporate scene has changed dramatically with the Kuala Lumpur Stock Exchange growing to comprise of 630 public listed companies on its main board and 311 on its Second Board. This and the increasing global economic competition, have called for the necessary improvement of corporate governance structures in Malaysia. However, the first major move to improve the standard of corporate governance locally came about soon after the onslaught of the Asian Financial crisis in 1997 which claimed as victims many major corporations in the region including Malaysia.