Malaysian Chinese CEOs and Firm Performance
This paper investigates whether Malaysian Chinese CEOs produce higher firm performance, in particular, the effect of ethnicity on financial performance from cultural dimensions. While the cultural dimension receives widespread attention in economics and sociology research, it has received much less attention in finance studies. The data covered were hand collected information on CEOs and board characteristics of firms listed in Bursa Malaysia over the 2009-2015 period. Using panel regression, the study documented empirical evidence that Malaysian Chinese CEOs deliver higher firm performance, especially if they graduated from overseas. Results are consistent even after controlling for firm level corporate governance characteristics. The findings suggest that Malaysian Chinese CEOs possess some quality traits that enable them to deliver higher firm performance. This is not only due to their cultural beliefs, but education profile as well. These findings contribute practical implications for CEO selection in corporations.
Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309. https://doi.org/10.1016/j.jfineco.2008.10.007
Anderson, C. A., & Anthony, R. N. (1986). The new corporate directors. John Wiley and Sons.
Barroso, C., Villegas, M. M., & Pérez‐Calero, L. (2011). Board influence on a firm's internationalization. Corporate Governance: An International Review, 19(4), 351-367. https://doi.org/10.1111/j.1467-8683.2011.00859.x
Bluedorn, A. C., & Lundgren, E. F. (1993). A culture-match perspective for strategic change. Research in Organisational Change and Development, 7, 137-179.
Child, J. C. (1981). Culture, contingency and capitalism in the cross-national study of organizations. Research in Organizational Behavior, 3, 303-356.
Chou, H. I., Chung, H., & Yin, X. (2013), Attendance of board meetings and company performance: Evidence from Taiwan. Journal of Banking & Finance, 37(11), 4157-4171. https://doi.org/10.1016/j.jbankfin.2013.07.028
Ciroka, N. (2014). CEO's personality and their impact on an organizational performance. European Scientific Journal, 10(34), 315-330.
Claessens, S., Djankov, S., & Lang, L. (2000). The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58(1-2), 81-112. https://doi.org/10.1016/S0304-405X(00)00067-2
Dai, O., & Liu, X. (2009). Returnee entrepreneurs and firm performance in Chinese high-technology industries. International Business Review, 18(4), 373-386. https://doi.org/10.1016/j.ibusrev.2009.03.004
Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: A meta-analysis. Academy of Management Journal, 42(6), 674-686. https://doi.org/10.2307/256988
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2), 301-325. https://doi.org/10.1086/467037
Fu, P. P., Peng T. K., Kennedy J. C., & Yukl, G. (2004). Examining the preferences of influence tactics in Chinese societies: A comparison of Chinese managers in Hong Kong, Taiwan and Mainland China. Organizational Dynamics, 33(1), 32-46. https://doi.org/10.1016/j.orgdyn.2003.11.003
Giannetti, M., Liao, G., & Yu, X. (2015). The brain gain of corporate boards: Evidence from China. The Journal of Finance, 70(4), 1629-1682. https://doi.org/10.1111/jofi.12198
Goodkind, D. (2019). The Chinese diaspora: Historical legacies and contemporary trends. United States Census Bureau, United States Department of Commerce. https://www.census.gov/ content/dam/Census/library/working-papers/2019/demo/Chinese_Diaspora.pdf
Gul, F. A., Srinidhi, B., & Tsui, J. S. (2008). Board diversity and the demand for higher audit effort. The Hong Kong Polytechnic University. https://ssrn.com/abstract=1359450 https://doi.org/10.2139/ssrn.1359450
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. The Academy of Management Review, 9(2), 193-206. https://doi.org/10.2307/258434
Hofstede, G. (2001). Culture's consequences, comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Sage Publications.
Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831-880. https://doi.org/10.1111/j.1540-6261.1993.tb04022.x
Jung, D., Chan, F., Chen, G., & Chow, C. (2010). Chinese CEOs' leadership styles and firm performance. Journal of Asia Business Studies, 4(2), 73-79. https://doi.org/10.1108/jabs.2010.4.2.73
Lau, C. (1995). Organization development practices in Hong Kong: Current state and future challenges. Asia Pacific Journal of Management, 12(1), 101-114. https://doi.org/10.1007/BF01733974
Laurent, A. (1986). The cross-cultural puzzle of international human resource management. Human Resource Management, 25(1), 91-102. https://doi.org/10.1002/hrm.3930250107
Lee, J. H., & Roberts, M. J. (2015). International returnees as outside directors: A catalyst for strategic adaptation under institutional pressure. International Business Review, 24(4), 594-604. https://doi.org/10.1016/j.ibusrev.2014.10.015
Li, J., Lam, K., & Fu, P. P. (2000). Family-oriented collectivism and its effect on firm performance: A comparison between overseas Chinese and foreign firms in China. International Journal of Organizational Analysis, 8(4), 364-379. https://doi.org/10.1108/eb028923
Lockard, C. A. (2013). Chinese migration and settlement in Southeast Asia before 1850: Making fields from the sea. History Compass, 11(9), 765-781. https://doi.org/10.1111/hic3.12079
O'Reilly III, C. A., Caldwell, C. F., Chatman, J. A., & Doerr, B. (2014). The promise and problems of organizational culture: CEO personality, culture, and firm performance. Group and Organization Management, 39(6), 595-625. https://doi.org/10.1177/1059601114550713
Priebe, J., & Rudolf, R. (2015). Does the Chinese diaspora speed up growth in host countries? World Development, 76(C), 249-262. https://doi.org/10.1016/j.worlddev.2015.07.007
Rugman, A. M., Nguyen, Q. T. K., & Wei, Z. (2016). Rethinking the literature on the performance of Chinese multinational enterprises. Management and Organization Review, 12(2), 269-302. https://doi.org/10.1017/mor.2016.13
Samphantharak, K. (2011). The rise of China and foreign direct investment from Southeast Asia. Journal of Current Southeast Asian Affairs, 30(2), 65-75. https://doi.org/10.1177/186810341103000204
Shapiro, D., & Li, J. (2016). Understanding the 'enigma' of Chinese firm performance: Confucius and beyond. Management and Organization Review, 12(2), 259-267. https://doi.org/10.1017/mor.2016.12
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737-783. https://doi.org/10.1111/j.1540-6261.1997.tb04820.x
Sirota, D., & Greenwood, J. M. (1971). Understanding your overseas workforce. Harvard Business Review, 49(1), 53-60.
Statista. (2018). Countries with the largest number of overseas Chinese [Data set]. https://www.statista.com/statistics/279530/countries-with-the-largest-number-of-overseas-chinese/
Tong, C. K. (2014). Chinese business: Rethinking guanxi and trust in Chinese business networks. Springer. https://doi.org/10.1007/978-981-4451-85-7
Tsui, A. S., Wang, H., Xin, K., Zhang, L., & Fu, P. P. (2004). Let a thousand flowers bloom': Variation of leadership styles among Chinese CEOs. Organizational Dynamics, 33(1), 5-20. https://doi.org/10.1016/j.orgdyn.2003.11.002
Tyson, A. D., Jeram, D., Sivapragasam, V., & Noor Azlan, H. (2011). Ethnicity, education and the economics of brain drain in Malaysia: Youth perspectives. Malaysian Journal of Economic Studies, 48(2), 175-184.
Weidenbaum, M. (1998). The bamboo network: Asia's family-run conglomerates. World View. https://www.strategy-business.com/article/9702
Weidenbaum, M., & Hughes, S. (1996). The bamboo network: How expatriate Chinese entrepreneurs are creating a new economic superpower in Asia. The Free Press.
Westwood, R. I., Tang, S. F. Y., & Kirkbride, P. S. (1992). Chinese conflict behavior: Cultural antecedents and behavioral consequences. Organization Development Journal, 10(2), 13-19.
White, J. W., & Ingrassia, P. (1992, April 7). Board ousts managers at GM, takes control of crucial committee. The Wall Street Journal. https://s.wsj.net/public/resources/documents/Ingrass ia-ShakeUp.pdf
Woodman, R. W. (1989). Organizational change and development: New arenas for inquiry and action. Journal of Management, 15(2), 205-28. https://doi.org/10.1177/014920638901500205
Wu, F., & Duk, S. Y. (1995). Hong Kong and Singapore: Twin capitals for overseas Chinese capital. Business & The Contemporary World, 7(3), 21-33.
Yap, I. L. K., Chan, S. G., & Zainudin, R. (2017). Gender diversity and firms' financial performance in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 13(1), 41-62. https://doi.org/10.21315/aamjaf2017.13.1.2
Yu, T. F. (2020). Queer migration across the Sinophone world: Queer Chinese Malaysian students' educational mobility to Taiwan. Journal of Ethnic and Migration Studies, 47(15), 3549-3563. https://doi.org/10.1080/1369183X.2020.1750946
Copyright (c) 2022 UNIMAS Publisher
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.