How macroeconomics is different from microeconomics Essay

What is economics? Before we start to learn about economics, we have to understand that what is the different between macroeconomics and microeconomics. Macroeconomics and microeconomics are the main branches of economics. (Karl E. Case, Ray C. Fair and Sharon M. Oster (2012): Principles of Economics, 10th ed. Global Edition, Chapter 1). And, I will describe that with examples. Microeconomics seems likes the â€Å"trees†. It studies and focuses on one unit at the same time, like the firm, the industry and the household. Nevertheless, macroeconomics seems like the â€Å"forest†. It is because it studies and analyses the whole economics, the sum of these. First of all, Microeconomics examines the functioning of individual industries and the behavior of individual decision – making units, typically firms and households.( Karl E. Case, Ray C. Fair and Sharon M. Oster (2012): Principles of Economics, 10th ed. Global Edition, Chapter 1) It also analyses about the individual producers – that is how to allocate limited resources in the production of various commodities to make the maximum profits. Furthermore, microeconomics studies how households and firms make choices, how they interact on the market and how the government tried to influence their choice. Microeconomics concerned about people’s decisions and behaviors, that how to affect the supply and demand by goods and services. For example, who is responsible for determining prices and also how to determine the supply and demand by goods and services. Microeconomics would be more focus on examine one aspect of the economic behavior. Nevertheless, it will neglect the interaction with the rest of the economy in order. It is for keep the simplicity of the analysis. In my opinion, i think the important thing in microeconomics, that is microeconomics always ignore other problems during analysis the individual research. When microeconomics analysis neglects some of these indirect effects, it would be â€Å"partial’ rather than â€Å"general’ analysis.†Partial† equals the microeconomics analysis; â€Å"general† equals the macroeconomics. That also is the main different between microeconomics and macroeconomics. And, according to the principle of microeconomics which is microeconomics  focus on detailed understanding of particular markets. So, many interactions with other markets are suppressed. On the other hand, macroeconomics looks at the economy as a whole and examines the economic behavior of aggregates – income, employment, output and so on – on a national scale. (Karl E. Case, Ray C. Fair and Sharon M. Oster (2012): Principles of Economics, 10th ed. Global Edition, Chapter 1) Also, macroeconomics studies the interaction of different parts of the economy. Macroeconomics analysis is based on production, income, price level and unemployment throughout the economic behavior. Macroeconomics studies the economy as a whole, including some problem, such as inflation, unemployment and economic growth. And, some macroeconomics concepts like gross domestic product, aggregate price level and unemployment rate always use for analysis about macroeconomics. Macroeconomics will explain why the economy will have an economic recession and unemployment. And, macroeconomics will talk about why some economies grow much faster than other economies in the long period. Also, macroeconomics involved in policy issues, such as government intervention can reduce the severity of the recession. Generally, macroeconomics focuses on households, firms (which together compose the private sector), the government (the public sector) and the rest of the world (the international sector). And, government has used some policies to influence the macroeconomy. For example, fiscal policy, monetary policy and growth or supply – side policies. Macroeconomics would not study ‘one’ thing, such as just one product, like a car or a bed. They group them to be â€Å"consumer goods†. There are many differences between microeconomics and macroeconomics. The typical different is microeconomics deals with ‘individual’ and macroeconomics deals with ‘aggregate’. That is macroeconomics deals with the sum of these ‘individual’. There are some differences,  First of all, I will talk about the production different. In microeconomics, the production and output are in individual industries and businesses. They will think about what to produce, how much to buy, some of these personal questions. For example, how many cars they will produce or how much office space they need to rent. On the opposite side, macroeconomics is focused on  national production and output. For example, the total industrial output, gross domestic product and growth of output. The second is about the prices different between microeconomics and macroeconomics. In microeconomics, it just focuses on the prices of individual goods and services. It examines on one product’s price. For example, price of skin care, price of coal, food prices and also apartment rents. However, macroeconomics looks at the overall price level which is aggregate the price level. For example, the consumer prices, producers prices and rate of inflation, etc. it can use for examine the whole economics and know more interaction on the whole economics. In addition, we will talk about the employment different between microeconomics and macroeconomics. In microeconomics, it is concentrate on employment by individual business and industries. For example, the jobs in the medical industry, number of employees in a firm and number of accountants. However, macroeconomics is focused on the employment and the unemployment in the economy. For example, the unemployment rate and the total number of jobs. Macroeconomics will use this information to analysis the interaction on the markets. Moreover, I will talk about the â€Å"income† difference between microeconomics and macroeconomics. In macroeconomics, income means national income. They just look at the total wages and the total salaries. They also look at the total corporate profits. On the opposite side, We can see that the income in microeconomics is so small, it just one thing (an individual, not the sum). But on macroeconomics, there are so large, is the sum of all of these. For example, in microeconomics, it looks at the wage in the auto industry, but in macroeconomics, it looks at the sum of wages in all industries. Also, microeconomics and macroeconomics are different on which problems they solve. That is what I mentioned before. Microeconomics solve the problem of resource allocation, that is what is produced, how to produce and whom to produce, for achieve the maximization of individual benefits. Macroeconomics researches resource utilization issues in the social sphere to achieve the maximization of social welfare. Moreover, the research methods are different between microeconomics and macroeconomics. The microeconomics method is  analysis the sum of the amount. The macroeconomics method is analysis the total amount and the average amount, it can reflect the whole economic operation of the decision, changes and their mutual relations. Also, microeconomics concerned with household income. But macroeconomics concerned with national income. Distinction between microeconomics and macroeconomics is not so strictly fixed. Many economic situations are both involving the microeconomic and also the macroeconomics. For example, the overall level of enterprise to invest in new machinery and equipment, it can help the speed of economic growth. That is a macroeconomic issue. However, to understand the business decision for purchase how many new machinery and equipment, we have to analysis the individual enterprise first. That is a microeconomic issue. Microeconomics is focus on a single economic unit, such as household and manufacturers. Macroeconomics study the economy as a whole, it analysis the economic issues on the total amount. Generally, in my opinion, the mainly different that between microeconomics and macroeconomics is economics in the small and economics in the large.

Harley Davidson Case Study Essay

Harley Davidson, established in 1903, is the largest manufacturer of motorcycles in the United States. While Harley Davidson dominates the moto market in the United States, it is very small compared to the international market which is infiltrated with large Japanese firms such as Kawasaki, Honda and Yamaha who produce various categories of motorcycles. Harley Davidson has deep rooted brand equity in the United States and remains loyal in it’s style. It has also remained consistent in manufacturing only heavyweight motorcycles. By showcasing only a single model type, Harley Davidson has established itself as a leader in the United States market. Other international markets, especially Europe and Asia, produce many lines of sports motorcycles (street bikes, scooters etc), as this meets the demands of these markets. Harley Davidson classifies their bikes into three main heavyweight categories (1) Touring Bikes, (2) Custom Bikes, and (3) Sportster Bikes. More than half of Harley Davidson’s revenue is generated from sales from within the United States, with a much smaller presence in Europe, Asia and Latin America. Harley Davidson has tried unsuccessfully to acquire additional motorycle companies twice since its origination but ultimately has continued to keep its product lines simple and focused around a few primary products. Description of Data and Sources Initialal research was conducted on the history of Harley Davidson Motorcycles by researching their website. Data was then obtained from a variety of sources including industry journals, annual sales reports, and company websites. By comparing sales and annual (10k) reports to those of its competitors, we were able to determine market patterns and explain the market structure in which Harley Davidson Motorcycle competes. Sales reports compared units sold by the Harley Davidson , as well as competition among firms internationally displayed by the type of bikes sold and in which geographic areas. Explanation of Methods In order to establish initial market structure and competitiveness, we collected data on the total units of Heavyweight motorcycles sold in 2012 in the United States. We gathered data on the numbers of units sold by Harley Davidson’s top three competitors, which we learned were Honda, Kawasaki and Yamaha, respectively. In order to establish a price per unit, we took the median price of each firm’s heavyweight inventory and then took an average based on these figures. The number of units sold multiplied times average price per unit gave us an accurate reflection of over sales for 2012 when cross referenced with annual report data. Our data had some limitations as some firm’s data did not highlight units sold or sales revenue from the heavyweight market. We had to deduce and infer with the data we were given. Another limitation in data collection came when gathering information about price mark up and marginal cost. We sought information from industry experts who had insight in this area. Analysis and Results The C4 four-firm concentration ratio of .880 indicates that there are only a few firms who produce most of the industry’s output. The heavyweight industry is highly concentrated. Most of this industry’s output is produced by Harley Davidson, Honda, Yamaha and Kawasaki. The Herfindahl-Hirschman Index (HHI) is 3,586 out of 10,000. This suggests that there are multiple firms in the industry who consume a considerable part of the market share. The top four firms account for almost 40% of the market. This number would deter an investor when considering a possible merger. Demand and Pricing Structure/Lerner Index The Lerner Index for a Harley Davidson is .25 and the mark-up is 1.3. HD charges a price 25% over the marginal cost or 1.3 times the actual marginal cost. In other words, for each dollar paid from the consumer towards the purchase of a new motorcycle, $.25 is markup. Market Structure Harley Davidson (HD) Motorcycles have many different aspects that contribute to the market structure, specifically the classification of motorcycles by size, the number of firms in the market both national and international, brand equity merchandising which includes entry to the apparel, accessories and licensing markets, barriers to entry and various merger attempts in the past. HD Motorcycles are classified into heavyweight classes such as Touring, Custom, or Sportster. In 2011 Touring motorcycle accounted for 92,002 bikes out of a total of 233,117 bikes sold for Harley Davidson (Harley Davidson Inc., 2012). Second leading in sales were Custom bikes at 91,459 bikes (Harley Davidson Inc., 2012). Overall, Harley Davidson sold 152,180 units in the United States and 80,937 units internationally for FY 2011 (Harley Davidson, Inc., 2012). In international markets Harley Davidson sold 83,505 units compared to 151,683 units in the United States (Harley Davidson, Inc., 2012). Outside of the United States, sales in Europe and surrounding regions were the second largest region for Harley Davidson with 44,340 units sold in 2011 (Harley Davidson, Inc. 2012). Units sold in the Asian Region came in third at 21,416 units, and the least number of units sold for Harley Davidson was in the Latin American Region, at 7,247 units. All regions saw an increase in the number of units sold from 2010 to 2011 but the United States still remains responsible for 68% of total units sold (Harley Davidson, Inc., 2012). In 2012 HD experienced continued growth as they sold 145,391 units globally in the first 6 months; this is a 9.3% increase from the year before. Retail sales also increased by 12% in the US with a 16.5% increase in Asia/Pacific and a 58% in Latin America (Harley Davidson, Inc., 2013). Harley Davidson has seen steady growth in recent years. Harley Davidson has not always sustained yearly growth. As the economy was slowing slipping during the recession of 2008, Harley Davidson was forced to make some decisions in order to survive. In 2009 Harley Davidson announced they would discontinue the Buell Motorcycle brand from their line to focus all of their resources on producing their primary products in order for Harley Davidson to stay afloat (Crowe, 2009). In 1994 Harley Davidson became a 49% owner in Buell Motorcycle Company, a company that was founded by a former Harley Davidson engineer, Erik Buell (Autoevolution, 2013). In 1998, four years after entering business together Harley Davidson purchased an additional 49% of Buell Motor Company leaving the creator with only 2% ownership (Autoevolution, 2013). Harley Davidson would continue operating with Buell motorcycle brand for the next eleven years creating over 17 models of innovative motorcycles, however in 2009, as profits decreased, HD made a decision to end business with Buell. In 2008, during these same difficult economic times, Harley Davidson acquired an Italian motorcycle company MV Agusta for $109 million hoping to increase sales and market expansion overseas in an area dominated by Japanese competitors (Barrett, 2010). Shortly after acquisition the market tanked and Harley Davidson had recorded $162 million in losses with the MV Agusta line (Crowe, 2009). The relationship lasted just over a year before Harley Davidson decided to sell the brand in 2009, at the same time it discontinued its relationship with Buell. Finally, accessories and licensing sales is another segment of the market heavily dominated by Harley Davidson. During the economy crash while bike sales slowed revenue generated from the sales of apparel and merchandise helped to contribute to the overall bottom line for Harley Davidson. In 2012 $69.3 million was generated from the sales of general merchandise trademarked as â€Å"MotorClothes† was up 12.8% from FY 2011 (Harley Davidson Inc., 2012). Summary and Conclusion Although Harley Davidson dominates the market in the United States, it has been the smallest in Europe and the 4th in Asia/Pacific region which is dominated by Japanese brands. One reason for Harley’s smaller market share in the Europe and Asia region is that the company cannot produce enough motorcycles to meet the demand and its prices tend to be higher than competitive models. Shortages of Harleys lead many consumers to purchase competitive bikes as there are 2-year waiting lists for some Harley models (â€Å"Company spotlight: Harley-Davidson†). This would lead us to believe that Harley Davidson acts as a leader in a Stackelberg Oligopoly as it chooses its level of output in the market. In the United States Harley Davidson is one of a few firms that create motorcycles for touring or cruising. Harley Davidson produces differentiated products and remains the leader in selling them. Competitor firms such as Honda and Yamaha sell a significantly smaller number of motorcycles in the US markets compared to Harley Davidson. Barriers to entry have been exemplified by companies such as Polaris and Triumph who have tried to enter the market but remain at 2-3% of market share. Market Percentage In United StatesUnits Sold (in K units)Revenue (in M $) Harley Davidson57%161$2,500 Honda17%48$744 Kawasaki9%25$587 Yamaha5%14$217 Other12%34$527 References Autoevolution. (2013). Buell Brand History. Retrieved from http://www.autoevolution.com/moto/buell/history/ Barrett, R. (August, 2010). Harley Davidson takes beating on MV Agusta. Retrieved from http://www.jsonline.com/blogs/business/100759404.html Company Spotlight: Harley-Davidson Motor Company. (2006). MarketWatch: Global Round-up, 5(10), 14-19. Crowe, P. (November, 2009). Harley Davidson and Buell – Unfinished Business. Retrieved from http://thekneeslider.com/harley-davidson-and-buell-unfinished-business/ DATAMONITOR: Harley-Davidson, Inc. (2011). Harley-Davidson, Inc. SWOT Analysis, 1-9. Delmont, J. (2013). LEANING INTO THE CURVE. Dealernews, 49(1), 20. Harley Davidson, Inc. (January, 2012). Harley Davidson Earnings, Retail Motorcycle Sales Shows Continued Strength. Retrieved from http://investor.harley davidson.com/phoenix.zhtml?c=87981&p=irol-newsarticle&ID=1651657 James B. Kelleher, R. (2013, June 30). Harley-Davidson looks beyond the aging white male. St. Paul Pioneer Press (MN) M.L. Johnson The Associated, P. (2013, June 10). Stripped-down Harley-Davidson rebounds from recession. Charleston Gazette (WV). Motorcycle Daily (August, 2010). Victory Motorcycle First Ride. Retrieved from http://www.motorcycledaily.com/2010/08/2011-victory-motorcycles-md-first-ride/ Motorcycle USA. (February, 2008). Victory Motorcycle History. Retrieved from http://www.motorcycle-usa.com/690/2587/Motorcycle-Article/Victory-Motorcycle-History.aspx Muller, J. (2013). Return of the Indian. Forbes, 191(1), 36-38. (2013, February 14). StockCall Study on Polaris Industries and Harley-Davidson: Recreational Vehicle Companies Raise Dividends. PR Newswire Europe.

Analysis of all constitutes of successful service delivery Essay

Analysis of all constitutes of successful service delivery - Essay Example Thus, prior to direct interaction with the service, consumers form own expectations about experiences related to the service consumption. In such way, customers establish own standards against which in the future the quality of the service received will be compared in accordance with the disconfirmation model. In case if the expectations about the service consumption were greater then the actual quality of product received, the outcome is negative disconfirmation or, in the other words, dissatisfaction with the service received. Whereas, if the expectations were smaller then the quality of the services received, the outcome is positive disconfirmation or product satisfaction. (Lovelock, C., & Wirtz, J. 2004). The higher customer satisfaction is, the greater is the possibility of customer loyalty in the post consumption stage. Thus, customer satisfaction and loyalty are directly related. The concept of customer loyalty is of vital importance as repurchase of services gives significant advantages to the service producer: a continuous stream of profit, reduction of marketing costs, growth of per-customer revenue, decrease in operating costs, increase in referral, increase in price premium (Youjae, Y., Suna, L. 2004). In relation to the customer loyalty, the service recovery concept should be emphasized, as customer loyalty is often seen as a consequence of successful service recovery. ... Thus, service recovery significantly influences customer's attitudes alongside with behavioral intentions and results in a possibility of customer loyalty when successfully executed (Lovelock, C., Patterson, P.G., & Walker, R.H. 2001). Customer Expectations of Services: Formation As previously stated, customer expectations are formed during the first two stages of customer purchase decision and are closely related to knowledge about a service a customer already has. The expectations formation process is not only influenced by marketer's communications, but also is shaped by word of mouth communication, past experience, and personal need. While marketer's communication is a relatively simple concept, word of mouth communication and past experience should be further categorized. Scholars distinguish two sources of customer knowledge about a service: external research and internal research. While internal search is directly linked to previous experiences and influences both the level of desired and expected services, external search category unites implicit and explicit promises (marketer's communication) and word of mouth secondary information received from second sources. Consequently, the two major types of knowledge are distinguished: experience and familiar ity, knowledge received through direct involvement and second hand knowledge, respectively (Palmer, A. 2001). Customer service expectations can be categorized into 5 overall dimensions: reliability, tangibles, responsiveness, assurance, and empathy. The formation process is affected by numerous factors; in general, price is considered to be the dominant one. In the article "Understanding Customer Expectations of Service" by Parasuraman, A., Berry, Leonard L., Zeithaml, Valarie (1991), authors

Projects and their management Essay Example | Topics and Well Written Essays - 1000 words

Projects and their management - Essay Example The organization has a team of 3 staff members charged with the duty to place students in a year in the job market that can contribute to the professional development of the students. This service makes the existence of SEC placement team more relevant in the face of the employers’ increasing demand for experience both for old and new graduates. To better its services, SPT could take advantage of the increasing use of web tools among students to make the placement services more efficient and convenient. Even though this would be a costly endeavor for a start-up placement enterprise, SPT longstanding existence can allow it use the revenue that it has accumulated in the past to build this web product intended to make placement exercises efficient and convenient and efficient for students and for SPT itself. SPT project will follow the conventional software process that is typical of all IT projects. The phases will include: business specification, system design, product development, testing, system implementation and maintenance and evaluation. Business specification will entail elicitation and assessment of the user and system requirements. Design will entail translation of the defined requirements into a set of design models, out of which the involve team will choose the best design. Development will entail translation of the design model that the developers settle on into program codes whose operation will follow the user requirements without compromising on the system requirements. Testing will involve assessment of whether the developed product functions as per the user-supplied requirements. Implementation will involve use of the developed system in the production environment, where students and other intended end-users will try executing their routinely duties to satisfy their r espective needs. Maintenance and evaluation will involve caring for the

Should Art Galleries or Museums or Heritage Sites Avoid Controversy or Essay

Should Art Galleries or Museums or Heritage Sites Avoid Controversy or Not - Essay Example Museums should steer clear of controversies. Controversies contribute to unnecessarily unfavorable images of the museum. The museums display artifacts representing different civilizations and cultures. Some quarters criticise the items displayed in the museum’s shelves. Controversies may unexpectedly appear. Individuals have different interpretations of the works of art. For a priest, nude painting is not an acceptable art alternative. The nude painting creates a vivid picture that the artist used a naked female model to finish the artwork. Museums should avoid controversies. Controversies trigger an unfavorable museum image. The word controversy equates to conflict. A conflict occurs when different sides have opposing views. Conflicts may lead to court cases. In other situations, a conflict creates animosity between the disagreeing parties. The news reports of controversies will not be good on the image of the affected museums. The above Rosetta Stone artifact is one example of a museum controversy. The controversy creates an unfavorable image that Our British Museum stole the Egyptian artifacts. In the controversy between the British Museum and Egypt, Egypt demands that the British Museum should return the Egypt artifacts. Egypt claims that Egypt is the owner of the artifacts displayed in the British Museum. This claim creates an impression on the public that the British Museum holds stolen property. Consequently, Egypt bombards the news outlets with statements that damage the reputation of the British Museum.   Further, the controversy states Egypt wants the Rosetta Stone returned to Egypt. However, our British Museum refuses to comply with Egypt’s demand. Similarly, Egypt insists that the Neues Museum should return Nefertiti’s Bust. The Neues Museum is located in Berlin, Germany.  

Title ix Research Paper Example | Topics and Well Written Essays - 1250 words

Title ix - Research Paper Example Furthermore, while Title IX legally prohibits discriminatory practices in state funded programs, it does not order the maintenance of strict ratio between the proportions the two genders in the institution’s athletic programs and its student body (Cohen v. Brown University). Furthermore, as far as the scope of Title IX is concerned, academic institutions have had to make tough decisions regarding which athletics programs fall within the scope of this law. The existing state of sports budget was such that in most institutions, the largest part of sports budgets were allocated to men’s athletics which did not reflect the percentage of men in the student body (Cohen v. Brown University). Keeping in view the above confusion, a law was passed in 1984 with respect to Title IX. In 1984 the U.S Supreme Court had passed the law that Title IX applied exclusively to those programs that were funded by state money (Cohen v. Brown University). This law was enforced in the context of Grove vs. City Bell (which shall be discussed later). This implied that discrimination was not illegal in activities or programs that were not funded by state money. This means that discrimination on the basis of gender in athletic sports would not be considered unlawful because very few of such programs are funded by the state or have funds allocated specifically for them. Additionally, athletic programs can be considered as subunits of an institution’s programs that receive state money for a wide range of reasons including funds for construction, student aids, feeding programs and research grants. The first case to be analyzed is the case of United States vs. Virginia. The Virginia Military Institute (VMI) has been noted for its lack of co-education and being an exclusively male undergraduate institute. This institution was sued by the United States with the argument that exclusive admissions to males were unconstitutional. This stance

Industrialism is maladaptive Essay Example | Topics and Well Written Essays - 500 words

Industrialism is maladaptive - Essay Example From my perspective, industrialism is maladaptive because industrialization is a defective adaptation towards the environment, which has flaws and caused unstableness of the environment. Industrial revolution enabled human society to grow into a larger scale with higher speed, which seemed exciting at the start but indeed harmful to the environment and the society itself. Referring to Rapa Nui’s tragedy, a small group of Polynesian settlers arrived at Easter Island. At the beginning, the population grew slowly. Several hundred years later, the population grew larger than before, and an obsession with building Moai led to increased pressure on the environment of the island. The residences didn’t realize the problems was coming and didn’t make changes. In the end, the Easter Island had been deforested, so people started fighting to each other for the resources that are limited on the island. The wars lead to famine, and eventually cultural collapse. (Terry) Industrialization is exactly the same thing as the Polynesian’s obsession of building Moai: overproducing products while some of them are unnecessary that consume a lot of resources from the environment and eventually damage the world we living in; the Easter Island is the small version of our world: limit land, limit resources that can’t be enough when the population is over its carrying capacity. What Terry found in his started to appear after industrialization when the scale of the world became larger and larger as well as the development speed got higher and higher; therefore, the industrial mode of adaptation has an unstable relationship with the environment. From my perspective, industrialism is maladaptive because industrialization is a defective adaptation towards the environment, which has flaws and caused unstableness of the environment. Industrial revolution

Article review and summary Essay Example | Topics and Well Written Essays - 1500 words

Article review and summary - Essay Example Conceptual model have been proposed to evaluate the performance of the CFO for making compensation decisions. Earlier it considers the quantitative financial performance measures and the managerial duties of the CFO but now it also considers fiduciary duties of the CFO in the post Sarbanes-Oxley Act (SOX) era towards the judgment of CFOs compensation. Conceptual model also takes into account two interactive factors and that are governance oversight and costs of firm of financial statement misreporting. Hypothesis tests, control variables, correlation matrix, robustness test and a look back analysis have been conducted to show the relationship between ICMW and the CFO compensation. Thus this paper focuses on the various threads of literature in judging the CFO compensation. Summary of Article Under the SOX Act of 2002, the CFOs and the CEOs i.e. the chief executive officer are required to maintain, establish and assess the effectiveness of internal control and also required to report o this assessment in both annual and quarterly financial statements. In the post SOX period CFOs have been more responsible for their actions as they play primary role in the oversight of internal control fulfillment. ... to reward attainment of firm annual objectives and long term mechanisms are designed to encourage sustainable growth of the firm and to align the management interest with those of shareholders. Different proxy statements state that along with the compensation committees, CEOs also plays an important role in deciding the CFO compensation. The discussion suggests that in the current year i.e. year t, with the disclosure of ICMW, CFO compensation has resulted a decline in comparison to previous year. Managerial duties of CFO involve adding towards operational decisions which influences the financial performance and fiduciary duties include maintaining top quality internal controls. Prior research has not observed the association between internal quality control and the CFO compensation because compensation of executives was earlier based on financial performance measures only but now it depends on nonfinancial performance measures also. It is expected that ICMW disclosure has resulted a decrease in CFO compensation. The conceptual model expresses two factors that influence the relationship between the CFO compensation and the ICMW disclosures. First is governance oversight and the second factor is costs of firm of financial statement misreporting. Agency theory stresses on the disagreement between shareholders and managers. The conflict is that though the shareholders employs the managers to take actions on their behalf but sometimes the manager’s interest are not aligned with those of the shareholders. There are certain difficulties associated with financial performance measures so, nonfinancial measures are considered more important in evaluating agent’s performance and also regarded as the key drivers of the firm value according to the prior research. Internal

The analysis of business environment of TESCO Essay

The analysis of business environment of TESCO - Essay Example Being one of the leader the vision of the firm depicts the goal of the company i.e. what exactly Tesco wants to achieve in the long run and to which direction the company is growing its business. The mission is the area to which the company wants to operate their businesses and the target customer for the company to serve. The mission gives the idea to build their foundation stone on which the company device strategies and implement them (Nwagbara, 2011, p.62). The core and foremost value of Tesco is to take care of the people for whom the company serves i.e. their customers. The only value of the firm is to earn lifetime loyalty of the people of the society and create value for them (Nwagbara, 2011, p.62). The company has a strong belief that no one in the industry tries so harder as Tesco to reach out to their customer and serve them with their needs (Polytechnic Institute of New York University, 2011, p. 1). The socially responsible company always maintain healthy relationship with the neighbourhood and always trying to meet the demands of the customers and be the responsible member of the society. Great quality of product with wide range of products is the major advantage of Tesco to maintain its brand image in the market for its core competencies. Stakeholder Analysis Stakeholders are individuals or companies who has stake in the company. Investors are the main drivers of a business. Tesco with its well governed policies in business and its sustainable growth in the market gives confidence to the investors to get back competitive return for their investment on Tesco and their shareholdings. The transparency of the company is the major reason for building trust of the company amongst the shareholders. The shareholders also have the belief on the company that it will implement strategies for the long term development of the company keeping in the mind the interest of the shareholders. Blackrock Inc holds the major share of the company with its 5.48% of issued share capital followed by Legal & General Investment Management Limited with around 3.99 % share and 3.02 % of the total share by Berkshire (Tesco Annual Report and Financial Statements 2011, 2011, p. 58). By benefiting the stakeholders of the company like shareholders, st affs, customers and other related people the company maintains the high quality products and in turn increase the value of the firm. The company constantly meet the growing need of the customers with the wide range of product line and differentiate itself from the competitors in the market. The image building potential and loyalty towards the stakeholders facilitates the process of

Final Exam Part 2 Essay Example | Topics and Well Written Essays - 750 words

Final Exam Part 2 - Essay Example The emergence of Conflict Resolution as an academic discipline was, actually, a culmination of multi-disciplinary studies in social sciences in an effort to find ways and means of averting the occurrence of another world war, after the Second World War (Ramsbotham, Wooodhouse, & Miall, 2011). As it can be seen, therefore, from the understanding of the concept, Conflict Resolution, and the reason that led to the emergence of this discipline as a fully-fledged academic discipline, the main importance of Conflict Resolution is to keep and to maintain peace among warring parties with differences that cannot effectively be solved through the court systems. Conflict resolution seeks to ensure that people co-exist peacefully with one another. Importance of culture in the field of conflict and resolution, and its relation with the idea of peace building Culture is deeply rooted in our past experiences, and as such, it can be viewed as a derivative of our experiences (Avruch, 20). Culture, th erefore, having been fashioned by our past experiences has great experience in our world view. Our world view is determined to a big extent by our cultures, and therefore, culture is quite important in conflict resolution. Culture can sometimes be used as an ideology to accelerate or to cause conflicts (Avruch, 16). In such a situation where a conflict arise due to misuse of culture for egocentric gains, the most effective way to resolve such a conflict is to analyze the cultural ideology that is used to cause the conflict, and after the analysis, you lay bare the inadequacies and the fallacies in the ideology. This will help a great deal in resolving the conflict. Culture can also be used to cause what Galtung calls, cultural violence (Galtung, 39). This happens when one uses their culture to justify their violent acts against other people. This will definitely lead to conflicts. Resolving such a conflict requires an analysis of the culture that is used to justify violence against other people, and after the analysis, the false ideas inherent in the culture should be exposed and logically critiqued. Cultural knowledge, therefore, is quite important in the field of Conflict resolution for it helps us in solving conflicts and maintaining peace. It is therefore related with the idea of peace building. Importance of the Nested Theory of Conflict in the field of Conflict Resolution Nested theory of conflict was propounded by Maire Dugan (Dugan, 14). Dugan propounded the theory after realising that some of the commonly used methods in conflict resolutions did not offer effective solutions, but rather, simplistic solutions that did not take into consideration the root causes of the problems. Dugan, therefore, came up with a nested model of conflict that is based on the structural nature of the conflicts. In the nested model, Dugan identified three levels of conflict. These levels are, issue specific level, relational level, structural subsystem level, and structural system level. The levels are interrelated and are arranged in such a way that the narrow types or levels of conflict are nested within the broader level. For instance, the level of issue specific is nested in all the other three levels, while structural sub-system level is nested only in the structural system level only. The issue-specific category of conflict is the simple issue based conflicts. Relational conflicts are conflicts that have their roots in our relation patterns on our attitudes towards

Apple Inc Development Essay Example for Free

Apple Inc Development Essay Steve Jobs and Steve Wozniak had withdrawn from Reed College and UC Berkeley, respectively by 1975. Wozniak designed a video terminal that he could use to log on to the minicomputers at Call Computer. Alex Kamradt commissioned the design and sold a small number of them through his firm. Aside from their interest in up-to-date technology, the impetus for the two Steves seems to have had another source. In his essay From Satori to Silicon Valley (published 1986), cultural historian Theodore Roszak made the point that the Apple Computer emerged from within the West Coast counterculture and the need to produce print-outs, letter labels, and databases. Roszak offers a bit of background on the development of the two Steves’ prototype models. In 1976, Wozniak started attending meetings of the Homebrew Computer Club. New microcomputers such as the Altair 8800 and the IMSAI inspired him to build a microprocessor into his video terminal and have a complete computer. At the time the only microcomputer CPUs generally available were the $179 Intel 8080 ($773.00 in present-day terms[11]), and the $170 Motorola 6800 ($734.00 in present-day terms[11]). Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU. When MOS Technology released its $20 ($82.00 in present-day terms[11]) 6502 chip in 1976, Wozniak wrote a version of BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniaks earlier 6800 paper-computer needed only minor changes to run on the new chip. Wozniak completed the machine and took it to Homebrew Computer Club meetings to show it off. At the meeting, Wozniak met his old friend Jobs, who was interested in the commercial potential of the small hobby machines. The Apple I was sold as an assembled circuit board and lacked basic features such as a keyboard, monitor, and case. The owner of this unit added a keyboard and a wooden case. The very first Apple Computer logo, drawn by Ronald Wayne, depicts Isaac Newton under an apple tree. The Apple logo in 1977 created by Rob Janoff with the rainbow color theme used until 1998. Steve Jobs and Steve Wozniak had been friends for some time, having met in 1971, when their mutual friend, Bill Fernandez, introduced 21-year-old Wozniak to 16-year-old Jobs. Jobs managed to interest Wozniak in assembling a machine and selling it. Jobs approached a local computer store, The Byte Shop, who said they would be interested in the machine, but only if it came fully assembled. The owner, Paul Terrell, went further, saying he would order 50 of the machines and pay US $500 ($2.04 thousand in present-day terms[11]) each on delivery.[12] Jobs then took the purchase order that he had been given from the Byte Shop to Cramer Electronics, a national electronic parts distributor, and ordered the components he needed to assemble the Apple I Computer. The local credit manager asked Jobs how he was going to pay for the parts and he replied, I have this purchase order from the Byte Shop chain of computer stores for 50 of my computers and the payment terms are COD. If you give me the parts on a net 30 day terms I can build and deliver the computers in that time frame, collect my money from Terrell at the Byte Shop and pay you.[13] With that, the credit manager called Paul Terrell who was attending an IEEE computer conference at Asilomar in Pacific Grove and verified the validity of the purchase order. Amazed at the tenacity of Jobs, Terrell assured the credit manager if the computers showed up in his stores Jobs would be paid and would have more than enough money to pay for the parts order. The two Steves and their small crew spent day and night building and testing the computers and delivered to Terrell on time to pay his suppliers and have a tidy profit left over for their celebration and next order. Steve Jobs had found a way to finance his soon-to-be multimillion-dollar company without giving away one share of stock or ownership. The machine had only a few notable features. One was the use of a TV as the display system, whereas many machines had no display at all. This was not like the displays of later machines, however; text was displayed at a terribly slow 60 characters per second. However, this was still faster than the teleprinters used on contemporary machines of that era. The Apple I also included bootstrap code on ROM, which made it easier to start up. Finally, at the insistence of Paul Terrell, Wozniak also designed a cassette interface for loading and saving programs, at the then-rapid pace of 1200 bit/s. Although the machine was fairly simple, it was nevertheless a masterpiece of design, using far fewer parts than anything in its class, and quickly earning Wozniak a reputation as a master designer. Joined by another friend, Ronald Wayne, the three started to build the machines. Using a variety of methods, including borrowing space from friends and family, selling various prized items (like calculators and a VW bus) and scrounging, Jobs managed to secure the parts needed while Wozniak and Wayne assembled them. But the owner of the Byte Shop was expecting complete computers, not just printed circuit boards. The boards still being a product for the customers Terrell still paid them.[14] Eventually 200 of the Apple Is were built. Apple II Main article: Apple II series Wozniak had already moved on from the Apple I. Many of the design features of the I were due to the limited amount of money they had to construct the prototype, but with the income from the sales he was able to start construction of a greatly improved machine, the Apple II; it was presented to the public at the first West Coast Computer Faire on April 16 and April 17, 1977. On the first day of exhibition, Jobs introduced Apple II to a Japanese chemist named Toshio Mizushima who became the first authorized Apple dealer in Japan. The main difference internally was a completely redesigned TV interface, which held the display in memory. Now not only useful for simple text display, the Apple II included graphics, and, eventually, color. Jobs meanwhile pressed for a much improved case and keyboard, with the idea that the machine should be complete and ready to run out of the box. This was almost the case for the Apple I machines sold to The Byte Shop, but one still needed to plug various parts together and type in the code to run BASIC. Building such a machine was going to be fiscally burdensome. Jobs started looking for cash, but Wayne was somewhat gun shy due to a failed venture four years earlier, and eventually dropped out of the company. Banks were reluctant to lend Jobs money; the idea of a computer for ordinary people seemed absurd at the time. Jobs eventually met Mike Markkula who co-signed a bank loan for US$250,000, and the three formed Apple Computer on April 1, 1976. The name Apple was chosen because the company to beat in the technology industry at the time was Atari, and Apple Computer came before Atari alphabetically and thus also in the phone book. Another reason was that Jobs had happy memories of working on an Oregon apple farm one summer.[15] With both cash, and a new case design in hand thanks to designer Jerry Manock, the Apple II was released in 1977 and became the computer generally credited with creating the home computer market[citation needed]. Millions were sold well into the 1980s. A number of different models of the Apple II series were built, including the Apple IIe and Apple IIGS, which could still be found in many schools as late as 2005.[citation needed] Apple III While the Apple II was already established as a successful business-ready platform because of Visicalc, Apple was not content. The Apple III (Apple 3) was designed to take on the business environment. It was released on May 19, 1980. The Apple III was a relatively conservative design for computers of the era. However, Steve Jobs did not want the computer to have a fan; rather, he wanted the heat generated by the electronics to be dissipated through the chassis of the machine, forgoing the cooling fan. Unfortunately, the physical design of the case was not sufficient to cool the components inside it. By removing the fan from the design, the Apple III was prone to overheating. This caused the integrated circuit chips to disconnect from the motherboard. Customers who contacted Apple customer service were told to drop the computer on the desk, which would cause the ICs to fall back in to place. Thousands of Apple III computers were recalled and, although a new model was introduced in 1983 to rectify the problems, the damage was already done. Apple IPO In August 1980, the Financial Times reported that Apple Computer, the fast growing Californian manufacturer of small computers for the consumer, business and educational markets, is planning to go public later this year. [It] is the largest private manufacturer in the U.S. of small computers. Founded about five years ago as a small workshop business, it has become the second largest manufacturer of small computers, after the Radio Shack division of the Tandy company.[16] On December 12, 1980, Apple launched the Initial Public Offering of its stock to the investing public. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 and instantly created more millionaires (about 300) than any company in history.[17] Several venture capitalists cashed out, reaping billions in long-term capital gains. In January 1981, Apple held its first shareholders meeting as a public company in the Flint Center, a large auditorium at nearby De Anza College, which is often used for symphony concerts. (Previous meetings were held quietly in smaller rooms, because there had only been a few shareholders.) The business of the meeting had been planned (or choreographed) so that the voting could be staged in 15 minutes or less. In most cases, voting proxies are collected by mail and counted days or months before a meeting. In this case, after the IPO, many shares were in new hands. Steve Jobs started his prepared speech, but after being interrupted by voting several times, he dropped his prepared speech and delivered a long, emotionally charged talk about betrayal, lack of respect, and related topics.

Corporate Performance of Malaysian Public Companies

Corporate Performance of Malaysian Public Companies 1.0 Introduction and motivation of study The issues of ownership and corporate governance have been discussed broadly in the prior literature especially in developed markets. However, in emerging economies like Malaysia, the issues received a vigorous impetus when the Asian Financial Crisis (AFC) hit Malaysia with severity in 1997/98. The AFC had depressed the economy to negative 7.5% in 1998, around 84,000 people lost their job and Malaysian capital market lost estimated USD200 billion in term of market capitalization during the crisis (Series of Malaysia Economic Reports). At the same time, the value of Malaysian currency had been decrease dramatically from 2.52 ringgit to the US dollar in June, 1997 to a lowest of 4.50 ringgit to the US dollar in January, 1998 (Tourres, 2003), plunging the country into its first recession for many years. Weak financial systems, excessive foreign borrowing and lack of transparency were among factors that contributed to the crisis (Fischer, 1998). Following the AFC, the Malaysian government introduced several reform measures to enhance transparency and accountability to restoring market confidence and encourage more stable and long term international investment. Example of these are the establishment of the Malaysian Institute of Corporate Governance (MICG) in 1998, the introduction of Malaysian Code of Corporate Governance (MCCG) in March 2000  [1]  which codified the principles and best practices of good governance and the launched of Malaysias Capital Market Master Plan in 2002 as a comprehensive plan that identifies the strategic positioning and future of the Malaysian capital market. The Minority Shareholders Watchdog GROUP (MSWG) was also setup in 2001 as respond to the AFC. This study focuses on Malaysias capital market mainly because of the confidence shown by the international business community concerning investments in Malaysia especially after the economy has fully recovered from the AFC. Based on The Productivity and Investment Climate Survey, World Bank 2009, which reports firms perceptions of the business environment, suggests that Malaysia is a relatively attractive place for investors. Meanwhile, Report on Doing Business 2010 ranked Malaysia 23rd out of 183 economies for ease of doing business and recently the World Competitiveness Scoreboard 2010 placed Malaysia 10th of the most competitive economy in the world, up from 18th place in the previous year. The achievement of Malaysia economy to date partly contributing through the active roles plays by the government-linked companies (GLCs) that form the backbone of the structure of the Malaysian economy. GLCs and their controlling shareholders, government-linked investment companies (GLICs), constitute a significant part of the economic structure of Malaysia. GLCs employ an estimated 5% of the national workforce, account for approximately 49% of market capitalization (Ringgit Malaysia 235.5 billion) of Bursa Malaysia Securities, contributes about 17 percent of the nations gross fixed capital formation and account for almost 10 percent of Gross Domestic Product (Malaysia Economic Report, 2009/2010). More than that, GLCs also plays an important role in executing government policies and initiatives especially in key sectors and new growth sectors. Even with active divestment and privatization, GLCs remained as the main service providers to the nations key strategic utilities and services including electricity, telecommunications, airlines, airports, public transportations, banking and financial services. On top of that, GLCs also on forefront in implementing recommendations of the best practices affirmed in Malaysian Code of Corporate Governance for Malaysian Public Listed Companies (Corporate Governance Survey Report, 2008). In the meantime, Corporate Governance Watch 2007, an annual collaborative study of corporate governance landscape of Asian market undertaken by independent stockbroker CLSA Asia Pacific Markets and the Asian Corporate Governance Association noted general improvement at the GLCs, a function of GLCs reforms and greater openness. Finally, the research on GLCs performance in Malaysia is also very important in order to investigate the real achievement of GLCs Transformation Program, the special program that was launched in May 2004 by Malaysian government to improve the performance of GLCs. Recently, the total shareholder return of a selection of top 20 GLCs, has outperformed the benchmark index of Kuala Lumpur Composite Index (KLCI) by a compounded annual growth rat e of 2.4 percent since the launch of the program (Business Times, 2009). Motivate by the above reason, part of this study attempts to examine whether or not government ownership lead to better company performance by focusing on the unique characteristics of government ownership in GLCs. The research is an attempt to extend the literature in this field and to provide new insight and understanding on the roles of state in emerging market considering the limited number of research in this area. Hence, the first part of this study attempts to answer the following primary research question: Is there any significant relationship between ownership structure of government- linked companies in Malaysia and firm value? 2.0 Theoretical Foundations of the Study There are number of different theoretical frameworks to explain and analyze corporate governance. Difference frameworks approaches corporate governance in different way, for example; the agency theory arises from the fields of finance and economics and the stakeholder theory arises from social-orientated perspective on corporate governance. According to Mallin (2010, p.14), the main theories that have affected the development of corporate governance are agency theory, transaction cost economics, stakeholder theory and stewardship theory. All these theory from difference disciplines have contributed to the development of theoretical aspects of corporate governance and its frameworks. However, the main theory that generally associated with ownership of the firm is agency theory that widely used in previous researches around the world. Theoretical and empirical researches on the relationship between ownership and firm value was originally motivated by the separation of ownership from control (Berle Means, 1932) and more recently, by agency theory (Jensen Meckling, 1976; Fama Jensen, 1983). In this theory, the basic assumption is that the goals and objectives of the principals (owners) and managers (agents) conflict. The central problem in corporate governance is to construct rules and incentive to effectively align the behavior of managers with the desires of principals (Hawley and Williams, 1996). The problem of agents being responsible to principals is that it compounds the agency costs identified by Jensen and Meckling (1976) with the basic assumption is that managers will act opportunistically to further their own interests before shareholders and one of the main reasons that the desired actions of principal and agent diverge is their different attitude towards risk (Shankman, 1999). Under the circumstances, in Malaysia where there is a high concentration of government ownership in firms (Tam and Tan, 2007) and high percentage of firms affiliated to government (La Porta et al., 1999), the government ownership actually has capacity to provide a control mechanisms to align management personal objectives with firm objectives and eventually increase the firm value. Parts of GLCs in Malaysia are privatized firms during Malaysian Privatization Policy in 1990s. Hence, the firms always related to political variables and in that stance the political view of GLCs conceive that the high level of government interferences resulted of inefficiency to the firm rather than facilitate the operation. 3.0 Literature Review and Research Gaps In Malaysia context, GLCs are defined as companies that have a primary commercial objective and in which the Malaysian government has a direct controlling stake via the GLICs. The GLICs are investment arms of the government that allocate government funds to the GLCs (Putrajaya Committee on GLC High Performance, 2004; Lau and Tong, 2008). Meanwhile, the controlling stake here refers to the governments ability (not just percentage ownership) to appoint board members, senior management and/or make major decisions. The Ministry of Finance (1993) classify GLCs as one in which the Malaysian government had an effective ownership interest of at least 20 percent of equity shares. Twenty percent voting rights in one particular company is considered to be sufficient for effective control and is employed in previous studies on ownership (La Porta et al.,1999; Faccio et.al., 2001 and Setia-Atmaja, 2009). Majority of GLCs under the federal government are under Khazanah Nasional Berhad, one of the most active GLICs in Malaysia  [2]  . Empirical studies on the relationship between government ownership and firm performance on the whole produced inconclusive results. Study by Ang and Ding (2005) on the relationship between ownership structure of Singaporean GLCs and performance found that GLCs exhibit higher valuations than those of the non-GLCs. In a related study, Ke and Issac (2007) report that governments shareholding is positively related to corporate performance of Chinas listed property companies, suggested that the economy sector is matter in the country. The findings however inconsistent with other empirical studies on the government ownership in China where in overall found the negative relationship between these two variables. For example, Sun and Tong (2003); McGuiness and Ferguson (2005); Gunasekarage, Xu and Wang (1999) and Li, Sun and Zou (2009) find that on average, the firms performance is negatively influenced by the governments ownership. Research in Malaysia on the relationship between government ownership and performance is lacking and also show mixed findings. Recently, Lau and Tong (2008) conducted a research on the impact of government intervention on firm value by employed 15 listed GLCs under Khazanah Nasional Berhad from year 2000 to 2005 (90 firm-year observations). They reveal a significant positive relationship between the degree of government ownership and firm value. However, this study has shortcomings as the selected data sets of 15 GLCs a year under Khazanah Nasional Berhad are too small and not robust enough to represent the overall GLCs performance. In fact, there are many more listed GLCs under the controlled of federal government GLICs  [3]  as well as GLCs under the state government jurisdiction. This research aims to address this issue by providing in-depth examinations and comprehensive study on all GLCs both at federal and state level. In a related study in Malaysia, Tam and Tan (2007) find that the performance of firms associated to government ownership is poor compared to others ownership types namely; individual-owned firms, foreign-owned firms and trust fund-owned firms. The study involved the top 150 listed companies on Bursa Malaysia Securities based on their ranking according to their market capitalization in 2000. The similar results also found in research by Ming and Gee (2008); and Chu and Cheah (2006) that show the negative relationship between government ownership and firms corporate performance. However, those studies also have limitations as they fail to properly identify the unique characteristics of GLCs ownership in Malaysia. In their studies, they group together all types of GLCs in one group in an attempt to find its relationship to performance without addressing issues of (i) the different type of GLCs controlled by federal government and GLCs controlled by states government and (ii) the differe nt type of shares in GLCs. With regard to the first issue, distinctions should be made between GLCs controlled by federal government (GLCFGs) and those controlled by state governments (GLCSGs) predominantly because they are difference in aspects of monitoring by federal government machineries and GLICs. GLCFGs subjected to strict supervision and monitoring not only by its GLICs but by ministries concerned under federal government. For example, Tenaga Nasional Berhad, a GLCFG is the largest electric utility company in Malaysia with one governments special share and majority of it ordinary shares owned by Khazanah Nasional Berhad . The Ministry of Finance responsible to the issues pertaining to the corporate matters of the company such as the approval entity for appointment of CEO/board of directors, their contract extension or termination, company performance etc. The selection of company chairman or CEO is carefully chosen based on their capability and suitability to head the organization. In the meantime, matters pertaining to policy such as approval for electric tariff increment and monitoring of company obeying to energy policy of Malaysia are under the responsibility of Ministry of Energy, Green Technology and Water as a guardian ministry. In addition, National Audit Department also conducting an annual auditing or special auditing to this company to be reported in Auditors General Report that eventually to be presented in Parliament. Furthermore, Public Accounts Committee, a committee under Parliament also have right to investigate whatever issues surrounding the company such as mismanagement or issues highlighted in Auditors General Report. With all these stringent monitoring systems, the GLCFGs are more cautious in their actions and eventually lead to good corporate performance in the long run. On the other hand, the extent of monitoring and supervision of GLCSGs by respective state governments is weaker. All issues pertaining GLCSGs are to be monitor and solve by State Economic Development Corporation (SEDC), a controlling agency cum main shareholder of GLCSGs. As contended in Agency Theory, lack of monitoring efforts will increase the agency costs that eventually lead to poor firm performance. Furthermore, GLICs at federal government have more systematically systems and incentives in monitoring and improve its GLCs performance compared to its counterpart in state government. For example is the establishment of a special program aims to transform GLCs to high performers entity called GLCs Transformation Program (GTP) that was launched in May 2004. Under this program, 20 larger GLCs (G-20) that controlled by different federal government GLICs has been selected to be transformed into high performance entity and become regional or global champions. Since the launch the programme, G-20 have made significant improvement especially on their financial aspects with operating cash flow for non-financial G-20 firms grew by 42% from RM14 billion in 2004 to RM20 billion in 2008. At the same time, aggregate earnings for 2008 also 53% higher compared to performance in 2004 and total shareholder returns has outperformed the benchmark index of Kuala Lumpur Composite Index (KLCI) by a compo unded annual growth rate of 4.8% since the launch of the program (GTP Mid-Term Progress Review, 2009). With regard to this issue, based on above motivations the current study argue that the performance of listed GLCs controlled by federal government are better than it counterparts under the controlled of state government. On the second issue, previous studies with concerned to government ownership and performance have ignored the very important characteristic of GLCs in Malaysia which is GLCs with governments one special share or golden share. As a background, to stimulate economic growth and reduce Government financial burden, privatization policy was introduced in 1983 and a lot of government entities as well as hundreds of government projects had been implemented by private sector. From 1983 until 2003, 474 projects and 457 government entities had been privatized from 1983 until 2005 involving assets sale of RM1.54 billion and equity sales of RM4.94 billion (Economic Planning Unit, Prime Minister Department). Various type of privatization such as sale, leased, management contract and build-lease-transfer have been used. However, in some strategic entities such as ports, main utilities provider (e.g. Tenaga Nasional Berhad) and national carrier (Malaysian Airlines Systems Berhad), Malaysian governme nt directly retained one special share or well known as golden share on top of ordinary shares that possess by GLICs on behalf of the government. In this type of GLCs, the degree of Government interference is excessively. The golden share grant government not only right to control companys direction including the appointment/dismissal of Chairman, Board member, CEO and senior management but also make major decisions such as restructuring exercise, mergers and acquisition, assets disposal and even cancel whatever decision make by the firms for the interest of government  [5]  by the government in 2001 with cost closed to Ringgit Malaysia one billion (Jalleh M., 2005) was a good example of how this type of GLCs being protected by the government. Another prominent case was the bailout of national car company Perusahaan Otomobil Nasional or Proton by state-owned oil company, Petroliam Nasional Berhad (known as Petronas) during the AFC through cash injected by instruction of the gove rnment (Restall, 2000). Based on the arguments, the present study believed that, this type of firms should be treated separately from other normal GLCs to moderate the impact of government interventions. By group them together into one group of GLCs as carried out by previous studies in Malaysia is inappropriate and may have distorted their studies result. This research basically will address both of these issue by differentiate all GLCs in Malaysia into groups according to their controlling agency at federal or state level and also based on their type of shares to observe their impact to firms corporate performance. This study expected to form a distinctive contribution to the knowledge and provide new facts on some elements of the government ownership in emerging economies by providing in-depth analysis on the issue. To the best of my knowledge, no particular researcher so far focuses on examining government ownership and firm value by make use of these proposed approaches. In addition to that, others variable that related to government ownership such as the role of politicians, government official and ex- government officials as board members in GLCs and also the influence of degree of government ownership in GLCs will also be tested. 4.0 Hypotheses development This present study ultimately intended to test for any association between ownership structures of GLCs and firm value. A total of seven aspects have been identified and the hypotheses developed as to their probable effect and firm performance. 4.1 GLCs under federal and state government and firm performance There were not studies specifically relate this variable with performance in Malaysia, but study by Chen, Firth and Xu (2009) on Chinas listed company revealed that the performance of State Owned Enterprises (SOEs) affiliated to central government or in Malaysian context is federal government is outperformed their counterpart which are related to state and local government. They also argued that different form of government ownership have different motivation and objectives on investment and it lead to different performance outcomes for the companies they have invested in. According to Loh (2008), the Malaysias constitutional design clearly favors the federal over the state governments, both in term of legislative jurisdictions as well as in terms of revenue assignments. Based on this argument and motivations on the effectiveness of monitoring systems by federal government as discussed in 3.0, the proposed hypothesis is: H1: The impact of GLCs controlled by federal government on firm performance is stronger than GLCs controlled by states government 4.2 GLCs with governments special share and firm performance As explained in Section 3.0 above, governments golden share providing the government will unlimited power to control company directions and sometimes lead to misallocation of resources by the companies itself or by the government in order to assist them. The holding agency of this share is Ministry of Finance Incorporated, the entity under Ministry of Finance, Malaysia.  Although there is no empirical study so far that investigate the relationship between governments special share and performance in Malaysia, but study by Sun, Tong H.S, and Tong (2002) from Chinas privatization experience shows that too much government interference and control of state-owned enterprises (SOEs) was among the reasons of SOEs poor performance. Another argument is that, as of the perspective of minority shareholders, too much intervention from government will jeopardize the companys development and resulted poor performance in the long run. Hence, this type of company is not attractive for investo rs. Therefore, it is hypothesized that: H2: The impact of GLCs without governments golden share on firm performance is stronger than GLCs with governments golden share 4.3 Degree of government ownership and firm performance Like many others East Asian countries, Malaysias corporate sector also experiencing a high level of ownership concentration (Liew, 2007; La Porta et al., 1998). Gunasekarage et. al (2006) in their study on influence of the degree of state ownership on the performance of listed Chinese companies conclude that firms performance is significant at high levels of government ownership and a balanced ownership structure enhances the firm performance. Study by Ke and D.Isaac (2007) in China listed property companies from 2000 to 2002 also reveals that the government shareholding is positively related to corporate performance. In Malaysia context, Lau and Tong (2008) in their study of 15 listed GLCs in Bursa Malaysia for the period of 2000 to 2005 find a significant positive relationship between the degree of government ownership  [6]  and firm value. However, this study has limitation in term of selected data sets as laid out in Section 3.0. Therefore the variable will be re-testing with more comprehensive data sets in order to have more concrete and robust evidence on the influence of this variable to firm performance. In line with agency theory that concentrated ownership in more effective in reducing managerial agency cost, the proposed hypotheses are: H3: There is a significant relationship between governments ownership degree in GLCs and firm performance 4.4 Politicians as director and firm performance GLCs traditionally has some of its boards of directors that had affiliations with the ruling party especially those GLCs that previously under government control and later on involved in privatization. Johnson and Mitton (2003) noted that as of October 1999, 15.8% or 67 out of 424 firms listed on the Main Board of Bursa Malaysia Securities are politically connected to the ruling party. Empirical evidence on the association between politicians as director and its impact to firm value is inconclusive. Study by Xu, Zhu and Lin (2005) on state owned enterprises in China revealed that politicians have incentives to control the firms to achieve economically inefficient objectives for political purposes. In a related study, Shleifer and Vishny (1994) exposed that excess employment and wages are common in public enterprise that control by politicians. This unhealthy phenomenon could lead to wrong managerial investment decisions and result in misallocation of companys resources that eventuall y reduce the firm value. Boubakri, Cosset and Saffar (2008) investigate the association between political connections of newly privatized firms and the impact to performance. The study involved 245 privatized firms in 27 developing and 14 industrialized countries and the existence of political connections is based on whether the particular firms have a politician or an ex-politician on their boards. They find that the politically-connected firms exhibit a poor performance compared to their non-connected counterparts. The similar result also found in Fan et. al (2007). Meanwhile, Fisman (2001) in his study in Indonesia and Faccio (2006) in analysis of 47 countries find a significant relationship between these two variables. In the context of Malaysia where business and politics are inter-related (Gomez and Jomo, 1997) indicated that, participation of politicians in GLCs might have effects on firm value as they act as a link between the governments and companys management. Therefore, it is hypothesized that, H4: There is a significant relationship between politician as director and firm performance 4.5 Government officials as board member in GLCs and firm performance GLCs are created partly to implement government policy objectives especially those established as a result of privatization exercises in the early eighties. Hence, most of their board of directors are civil servants either still in-service or formal government officials that act as eyes and ear of government as well as communication bridge between the management and the government. Agrawal and Knoeber (2001) in their study found that the politically experience directors that comprises former government officials benefits the company they served and noted that they are more prevalent in firms compare to others outside directors. In a related study in Singapore that involved 25 GLCs and 204 non-GLCs for the period from 1990 to 2000, Ang and Ding (2006) found that GLCs exhibit higher valuations than those of the non-GLCs in the area of profitability, efficiency and firms financial performance. Like Malaysian GLCs, Singapore GLCs also comprises government officials in their board. At suc h, it is hypothesized that, H5: There is a significant relationship between in service government official as director and firm performance H6: There is a significant relationship between former government official as director and firm performance 5.0 Research design and methodology 5.1 Data and sample design The first model in this research is designed to examine the impact of ownership structure on corporate performance of all GLCs listed on the main board of Bursa Malaysia Securities for the period of five years (2004 until 2008). To ensure that the sample clearly represented the population intended for the research and to harmonious the selected sample to the GLCs definition, the sample selection is based on the following criteria: At any time, one specific GLICs either at federal or states government level must be the single largest shareholder with at least 20% share ownership in one particular company on Main Board of KLSE and; The financial and unit trust companies are excluded as they are governed by different set of rules and acts that could affect the end findings of this study. In addition, all required financial data for the study period are to be available in databases (Datastream or Thomson Research) and information on ownership and corporate governance structure from companies respective audited annual report. The study constructs an unbalanced panel data of all GLCs during the study period. This approach has the advantage of attrition biases in correlation (Hu and Izumida, 2008). The observations period of 2004 to 2008 is chosen mainly because the period was the phase of economic stability in Malaysia when the countrys economy and capitals market activities fully recovered after the Asian Financial Crisis. The performance chart in Figure 2 below reveals that prior to AFC, the Kuala Lumpur Composite Index (KLCI) in average has been trading in an upward trend. However, the AFC push down the KLCI to below 600 during the peak of the crisis. The post-crisis period has seen steady increase in the value of the KLCI even though until 2006 Bursa Malaysia Securities still has some 200 companies trading at more than 50 percent discount to their book values (James, 2006). Another reason for the chosen period is to evaluate the impact of GLCs Transformation Program that launch in May 2004 by Malaysian government to improve performance of GLCs. 5.2 Methodology 5.2.1 The proposed model The following base model will be used to test the hypotheses that have been defined in the previous section: PERFORM = ÃŽÂ ± + ÃŽÂ ²1FG_GLC + ÃŽÂ ²2SG_GLC + ÃŽÂ ²3GOLD + ÃŽÂ ²4GOV_OWN + ÃŽÂ ²5POL + ÃŽÂ ²6GO_BOD + ÃŽÂ ²7EX-GO_BOD + ÃŽÂ ²8LOG_SIZE + ÃŽÂ ²9LEV + ÃŽÂ ²10BOD_SIZE + ÃŽÂ ²11BOD_MEET + ÃŽÂ ²12BOD_IND + ÃŽÂ µi Where; PERFORM = the dependent variables: proxy by ROA, ROE and Tobins Q; Independent variables: FG_GLC = GLCs under federal government (equal to 1 if a firm is under federal government, and 0 otherwise) SG_GLC = GLCs under state government (equal to 1 if a firm is under states government, and 0 otherwise) GOLD = GLCs which government owned one golden share (equal to 1 if a firm has governments golden share, and 0 otherwise) GOV_OWN = captures the percentage of government ownership in a GLC POL = captures the percentage of politician on the board GO_BOD = captures the percentage of government official in-service on the board EX-GO_BOD = captures the percentage of ex-government official on the board Control variables: LOG_SIZE = natural log of total assets as proxy of firm size LEV = firm leverage (total liabilities to total assets) BOD_SIZE = number of board of directors during the year BOD_MEET = number of board of directors meetings during the year BOD_IND = captures the percentage of independent directors on the board ÃŽÂ µi = error term 5.2.2 Operationalization of variable selection 5.2.2.1 The dependent variable The dependent variable in this study is firm performance that comprises accounting and market based performance namely return on assets (ROA)  [8]  and Tobins Q. They are to be employed in this study to measure the impact of ownership structure on corporate performance. The accounting-based performance is the most common types of performance measurement in assessing business performance. In this approach, annual report, which comprises income statements, balance sheets and statements of changes in financial position are the source of information to analyze companys financial performance for one particular financial year. This approach is very important for companys stakeholders such as potential investors since the indicator can help them in making investment decisions. It also vital in helping the companys shareholders to assess how well the company performed in market place in order to make decisions on management and employees rewards, setting suitable plans to sustain the goo d momentum or even take drastic approaches for company to remain in business. The accounting-based performance also helps manager to effectively plan and control in order to achieve the objectives of the company. For example, according to Thompson Yeung (2001), return on equity as one of the accounting-based measurements can accommodate the effect of different accounting procedures across industries and can minimize the multi-linearity between companys specific characteristics such as size, age and profitability. Both ROA and ROE are the most common measurement used in analyzing financial performance of companies and have been used widely in previous studies (Vafeas,1999; Abdullah,2004; Bhagat Black, 2002; Rahman Haniffa 2006; Ang Ding, 2006; Bhagat Bolton; 2008 and Chu, 2009). Since accounting-based performance measures the past and current performance of the firm, m Corporate Performance of Malaysian Public Companies Corporate Performance of Malaysian Public Companies 1.0 Introduction and motivation of study The issues of ownership and corporate governance have been discussed broadly in the prior literature especially in developed markets. However, in emerging economies like Malaysia, the issues received a vigorous impetus when the Asian Financial Crisis (AFC) hit Malaysia with severity in 1997/98. The AFC had depressed the economy to negative 7.5% in 1998, around 84,000 people lost their job and Malaysian capital market lost estimated USD200 billion in term of market capitalization during the crisis (Series of Malaysia Economic Reports). At the same time, the value of Malaysian currency had been decrease dramatically from 2.52 ringgit to the US dollar in June, 1997 to a lowest of 4.50 ringgit to the US dollar in January, 1998 (Tourres, 2003), plunging the country into its first recession for many years. Weak financial systems, excessive foreign borrowing and lack of transparency were among factors that contributed to the crisis (Fischer, 1998). Following the AFC, the Malaysian government introduced several reform measures to enhance transparency and accountability to restoring market confidence and encourage more stable and long term international investment. Example of these are the establishment of the Malaysian Institute of Corporate Governance (MICG) in 1998, the introduction of Malaysian Code of Corporate Governance (MCCG) in March 2000  [1]  which codified the principles and best practices of good governance and the launched of Malaysias Capital Market Master Plan in 2002 as a comprehensive plan that identifies the strategic positioning and future of the Malaysian capital market. The Minority Shareholders Watchdog GROUP (MSWG) was also setup in 2001 as respond to the AFC. This study focuses on Malaysias capital market mainly because of the confidence shown by the international business community concerning investments in Malaysia especially after the economy has fully recovered from the AFC. Based on The Productivity and Investment Climate Survey, World Bank 2009, which reports firms perceptions of the business environment, suggests that Malaysia is a relatively attractive place for investors. Meanwhile, Report on Doing Business 2010 ranked Malaysia 23rd out of 183 economies for ease of doing business and recently the World Competitiveness Scoreboard 2010 placed Malaysia 10th of the most competitive economy in the world, up from 18th place in the previous year. The achievement of Malaysia economy to date partly contributing through the active roles plays by the government-linked companies (GLCs) that form the backbone of the structure of the Malaysian economy. GLCs and their controlling shareholders, government-linked investment companies (GLICs), constitute a significant part of the economic structure of Malaysia. GLCs employ an estimated 5% of the national workforce, account for approximately 49% of market capitalization (Ringgit Malaysia 235.5 billion) of Bursa Malaysia Securities, contributes about 17 percent of the nations gross fixed capital formation and account for almost 10 percent of Gross Domestic Product (Malaysia Economic Report, 2009/2010). More than that, GLCs also plays an important role in executing government policies and initiatives especially in key sectors and new growth sectors. Even with active divestment and privatization, GLCs remained as the main service providers to the nations key strategic utilities and services including electricity, telecommunications, airlines, airports, public transportations, banking and financial services. On top of that, GLCs also on forefront in implementing recommendations of the best practices affirmed in Malaysian Code of Corporate Governance for Malaysian Public Listed Companies (Corporate Governance Survey Report, 2008). In the meantime, Corporate Governance Watch 2007, an annual collaborative study of corporate governance landscape of Asian market undertaken by independent stockbroker CLSA Asia Pacific Markets and the Asian Corporate Governance Association noted general improvement at the GLCs, a function of GLCs reforms and greater openness. Finally, the research on GLCs performance in Malaysia is also very important in order to investigate the real achievement of GLCs Transformation Program, the special program that was launched in May 2004 by Malaysian government to improve the performance of GLCs. Recently, the total shareholder return of a selection of top 20 GLCs, has outperformed the benchmark index of Kuala Lumpur Composite Index (KLCI) by a compounded annual growth rat e of 2.4 percent since the launch of the program (Business Times, 2009). Motivate by the above reason, part of this study attempts to examine whether or not government ownership lead to better company performance by focusing on the unique characteristics of government ownership in GLCs. The research is an attempt to extend the literature in this field and to provide new insight and understanding on the roles of state in emerging market considering the limited number of research in this area. Hence, the first part of this study attempts to answer the following primary research question: Is there any significant relationship between ownership structure of government- linked companies in Malaysia and firm value? 2.0 Theoretical Foundations of the Study There are number of different theoretical frameworks to explain and analyze corporate governance. Difference frameworks approaches corporate governance in different way, for example; the agency theory arises from the fields of finance and economics and the stakeholder theory arises from social-orientated perspective on corporate governance. According to Mallin (2010, p.14), the main theories that have affected the development of corporate governance are agency theory, transaction cost economics, stakeholder theory and stewardship theory. All these theory from difference disciplines have contributed to the development of theoretical aspects of corporate governance and its frameworks. However, the main theory that generally associated with ownership of the firm is agency theory that widely used in previous researches around the world. Theoretical and empirical researches on the relationship between ownership and firm value was originally motivated by the separation of ownership from control (Berle Means, 1932) and more recently, by agency theory (Jensen Meckling, 1976; Fama Jensen, 1983). In this theory, the basic assumption is that the goals and objectives of the principals (owners) and managers (agents) conflict. The central problem in corporate governance is to construct rules and incentive to effectively align the behavior of managers with the desires of principals (Hawley and Williams, 1996). The problem of agents being responsible to principals is that it compounds the agency costs identified by Jensen and Meckling (1976) with the basic assumption is that managers will act opportunistically to further their own interests before shareholders and one of the main reasons that the desired actions of principal and agent diverge is their different attitude towards risk (Shankman, 1999). Under the circumstances, in Malaysia where there is a high concentration of government ownership in firms (Tam and Tan, 2007) and high percentage of firms affiliated to government (La Porta et al., 1999), the government ownership actually has capacity to provide a control mechanisms to align management personal objectives with firm objectives and eventually increase the firm value. Parts of GLCs in Malaysia are privatized firms during Malaysian Privatization Policy in 1990s. Hence, the firms always related to political variables and in that stance the political view of GLCs conceive that the high level of government interferences resulted of inefficiency to the firm rather than facilitate the operation. 3.0 Literature Review and Research Gaps In Malaysia context, GLCs are defined as companies that have a primary commercial objective and in which the Malaysian government has a direct controlling stake via the GLICs. The GLICs are investment arms of the government that allocate government funds to the GLCs (Putrajaya Committee on GLC High Performance, 2004; Lau and Tong, 2008). Meanwhile, the controlling stake here refers to the governments ability (not just percentage ownership) to appoint board members, senior management and/or make major decisions. The Ministry of Finance (1993) classify GLCs as one in which the Malaysian government had an effective ownership interest of at least 20 percent of equity shares. Twenty percent voting rights in one particular company is considered to be sufficient for effective control and is employed in previous studies on ownership (La Porta et al.,1999; Faccio et.al., 2001 and Setia-Atmaja, 2009). Majority of GLCs under the federal government are under Khazanah Nasional Berhad, one of the most active GLICs in Malaysia  [2]  . Empirical studies on the relationship between government ownership and firm performance on the whole produced inconclusive results. Study by Ang and Ding (2005) on the relationship between ownership structure of Singaporean GLCs and performance found that GLCs exhibit higher valuations than those of the non-GLCs. In a related study, Ke and Issac (2007) report that governments shareholding is positively related to corporate performance of Chinas listed property companies, suggested that the economy sector is matter in the country. The findings however inconsistent with other empirical studies on the government ownership in China where in overall found the negative relationship between these two variables. For example, Sun and Tong (2003); McGuiness and Ferguson (2005); Gunasekarage, Xu and Wang (1999) and Li, Sun and Zou (2009) find that on average, the firms performance is negatively influenced by the governments ownership. Research in Malaysia on the relationship between government ownership and performance is lacking and also show mixed findings. Recently, Lau and Tong (2008) conducted a research on the impact of government intervention on firm value by employed 15 listed GLCs under Khazanah Nasional Berhad from year 2000 to 2005 (90 firm-year observations). They reveal a significant positive relationship between the degree of government ownership and firm value. However, this study has shortcomings as the selected data sets of 15 GLCs a year under Khazanah Nasional Berhad are too small and not robust enough to represent the overall GLCs performance. In fact, there are many more listed GLCs under the controlled of federal government GLICs  [3]  as well as GLCs under the state government jurisdiction. This research aims to address this issue by providing in-depth examinations and comprehensive study on all GLCs both at federal and state level. In a related study in Malaysia, Tam and Tan (2007) find that the performance of firms associated to government ownership is poor compared to others ownership types namely; individual-owned firms, foreign-owned firms and trust fund-owned firms. The study involved the top 150 listed companies on Bursa Malaysia Securities based on their ranking according to their market capitalization in 2000. The similar results also found in research by Ming and Gee (2008); and Chu and Cheah (2006) that show the negative relationship between government ownership and firms corporate performance. However, those studies also have limitations as they fail to properly identify the unique characteristics of GLCs ownership in Malaysia. In their studies, they group together all types of GLCs in one group in an attempt to find its relationship to performance without addressing issues of (i) the different type of GLCs controlled by federal government and GLCs controlled by states government and (ii) the differe nt type of shares in GLCs. With regard to the first issue, distinctions should be made between GLCs controlled by federal government (GLCFGs) and those controlled by state governments (GLCSGs) predominantly because they are difference in aspects of monitoring by federal government machineries and GLICs. GLCFGs subjected to strict supervision and monitoring not only by its GLICs but by ministries concerned under federal government. For example, Tenaga Nasional Berhad, a GLCFG is the largest electric utility company in Malaysia with one governments special share and majority of it ordinary shares owned by Khazanah Nasional Berhad . The Ministry of Finance responsible to the issues pertaining to the corporate matters of the company such as the approval entity for appointment of CEO/board of directors, their contract extension or termination, company performance etc. The selection of company chairman or CEO is carefully chosen based on their capability and suitability to head the organization. In the meantime, matters pertaining to policy such as approval for electric tariff increment and monitoring of company obeying to energy policy of Malaysia are under the responsibility of Ministry of Energy, Green Technology and Water as a guardian ministry. In addition, National Audit Department also conducting an annual auditing or special auditing to this company to be reported in Auditors General Report that eventually to be presented in Parliament. Furthermore, Public Accounts Committee, a committee under Parliament also have right to investigate whatever issues surrounding the company such as mismanagement or issues highlighted in Auditors General Report. With all these stringent monitoring systems, the GLCFGs are more cautious in their actions and eventually lead to good corporate performance in the long run. On the other hand, the extent of monitoring and supervision of GLCSGs by respective state governments is weaker. All issues pertaining GLCSGs are to be monitor and solve by State Economic Development Corporation (SEDC), a controlling agency cum main shareholder of GLCSGs. As contended in Agency Theory, lack of monitoring efforts will increase the agency costs that eventually lead to poor firm performance. Furthermore, GLICs at federal government have more systematically systems and incentives in monitoring and improve its GLCs performance compared to its counterpart in state government. For example is the establishment of a special program aims to transform GLCs to high performers entity called GLCs Transformation Program (GTP) that was launched in May 2004. Under this program, 20 larger GLCs (G-20) that controlled by different federal government GLICs has been selected to be transformed into high performance entity and become regional or global champions. Since the launch the programme, G-20 have made significant improvement especially on their financial aspects with operating cash flow for non-financial G-20 firms grew by 42% from RM14 billion in 2004 to RM20 billion in 2008. At the same time, aggregate earnings for 2008 also 53% higher compared to performance in 2004 and total shareholder returns has outperformed the benchmark index of Kuala Lumpur Composite Index (KLCI) by a compo unded annual growth rate of 4.8% since the launch of the program (GTP Mid-Term Progress Review, 2009). With regard to this issue, based on above motivations the current study argue that the performance of listed GLCs controlled by federal government are better than it counterparts under the controlled of state government. On the second issue, previous studies with concerned to government ownership and performance have ignored the very important characteristic of GLCs in Malaysia which is GLCs with governments one special share or golden share. As a background, to stimulate economic growth and reduce Government financial burden, privatization policy was introduced in 1983 and a lot of government entities as well as hundreds of government projects had been implemented by private sector. From 1983 until 2003, 474 projects and 457 government entities had been privatized from 1983 until 2005 involving assets sale of RM1.54 billion and equity sales of RM4.94 billion (Economic Planning Unit, Prime Minister Department). Various type of privatization such as sale, leased, management contract and build-lease-transfer have been used. However, in some strategic entities such as ports, main utilities provider (e.g. Tenaga Nasional Berhad) and national carrier (Malaysian Airlines Systems Berhad), Malaysian governme nt directly retained one special share or well known as golden share on top of ordinary shares that possess by GLICs on behalf of the government. In this type of GLCs, the degree of Government interference is excessively. The golden share grant government not only right to control companys direction including the appointment/dismissal of Chairman, Board member, CEO and senior management but also make major decisions such as restructuring exercise, mergers and acquisition, assets disposal and even cancel whatever decision make by the firms for the interest of government  [5]  by the government in 2001 with cost closed to Ringgit Malaysia one billion (Jalleh M., 2005) was a good example of how this type of GLCs being protected by the government. Another prominent case was the bailout of national car company Perusahaan Otomobil Nasional or Proton by state-owned oil company, Petroliam Nasional Berhad (known as Petronas) during the AFC through cash injected by instruction of the gove rnment (Restall, 2000). Based on the arguments, the present study believed that, this type of firms should be treated separately from other normal GLCs to moderate the impact of government interventions. By group them together into one group of GLCs as carried out by previous studies in Malaysia is inappropriate and may have distorted their studies result. This research basically will address both of these issue by differentiate all GLCs in Malaysia into groups according to their controlling agency at federal or state level and also based on their type of shares to observe their impact to firms corporate performance. This study expected to form a distinctive contribution to the knowledge and provide new facts on some elements of the government ownership in emerging economies by providing in-depth analysis on the issue. To the best of my knowledge, no particular researcher so far focuses on examining government ownership and firm value by make use of these proposed approaches. In addition to that, others variable that related to government ownership such as the role of politicians, government official and ex- government officials as board members in GLCs and also the influence of degree of government ownership in GLCs will also be tested. 4.0 Hypotheses development This present study ultimately intended to test for any association between ownership structures of GLCs and firm value. A total of seven aspects have been identified and the hypotheses developed as to their probable effect and firm performance. 4.1 GLCs under federal and state government and firm performance There were not studies specifically relate this variable with performance in Malaysia, but study by Chen, Firth and Xu (2009) on Chinas listed company revealed that the performance of State Owned Enterprises (SOEs) affiliated to central government or in Malaysian context is federal government is outperformed their counterpart which are related to state and local government. They also argued that different form of government ownership have different motivation and objectives on investment and it lead to different performance outcomes for the companies they have invested in. According to Loh (2008), the Malaysias constitutional design clearly favors the federal over the state governments, both in term of legislative jurisdictions as well as in terms of revenue assignments. Based on this argument and motivations on the effectiveness of monitoring systems by federal government as discussed in 3.0, the proposed hypothesis is: H1: The impact of GLCs controlled by federal government on firm performance is stronger than GLCs controlled by states government 4.2 GLCs with governments special share and firm performance As explained in Section 3.0 above, governments golden share providing the government will unlimited power to control company directions and sometimes lead to misallocation of resources by the companies itself or by the government in order to assist them. The holding agency of this share is Ministry of Finance Incorporated, the entity under Ministry of Finance, Malaysia.  Although there is no empirical study so far that investigate the relationship between governments special share and performance in Malaysia, but study by Sun, Tong H.S, and Tong (2002) from Chinas privatization experience shows that too much government interference and control of state-owned enterprises (SOEs) was among the reasons of SOEs poor performance. Another argument is that, as of the perspective of minority shareholders, too much intervention from government will jeopardize the companys development and resulted poor performance in the long run. Hence, this type of company is not attractive for investo rs. Therefore, it is hypothesized that: H2: The impact of GLCs without governments golden share on firm performance is stronger than GLCs with governments golden share 4.3 Degree of government ownership and firm performance Like many others East Asian countries, Malaysias corporate sector also experiencing a high level of ownership concentration (Liew, 2007; La Porta et al., 1998). Gunasekarage et. al (2006) in their study on influence of the degree of state ownership on the performance of listed Chinese companies conclude that firms performance is significant at high levels of government ownership and a balanced ownership structure enhances the firm performance. Study by Ke and D.Isaac (2007) in China listed property companies from 2000 to 2002 also reveals that the government shareholding is positively related to corporate performance. In Malaysia context, Lau and Tong (2008) in their study of 15 listed GLCs in Bursa Malaysia for the period of 2000 to 2005 find a significant positive relationship between the degree of government ownership  [6]  and firm value. However, this study has limitation in term of selected data sets as laid out in Section 3.0. Therefore the variable will be re-testing with more comprehensive data sets in order to have more concrete and robust evidence on the influence of this variable to firm performance. In line with agency theory that concentrated ownership in more effective in reducing managerial agency cost, the proposed hypotheses are: H3: There is a significant relationship between governments ownership degree in GLCs and firm performance 4.4 Politicians as director and firm performance GLCs traditionally has some of its boards of directors that had affiliations with the ruling party especially those GLCs that previously under government control and later on involved in privatization. Johnson and Mitton (2003) noted that as of October 1999, 15.8% or 67 out of 424 firms listed on the Main Board of Bursa Malaysia Securities are politically connected to the ruling party. Empirical evidence on the association between politicians as director and its impact to firm value is inconclusive. Study by Xu, Zhu and Lin (2005) on state owned enterprises in China revealed that politicians have incentives to control the firms to achieve economically inefficient objectives for political purposes. In a related study, Shleifer and Vishny (1994) exposed that excess employment and wages are common in public enterprise that control by politicians. This unhealthy phenomenon could lead to wrong managerial investment decisions and result in misallocation of companys resources that eventuall y reduce the firm value. Boubakri, Cosset and Saffar (2008) investigate the association between political connections of newly privatized firms and the impact to performance. The study involved 245 privatized firms in 27 developing and 14 industrialized countries and the existence of political connections is based on whether the particular firms have a politician or an ex-politician on their boards. They find that the politically-connected firms exhibit a poor performance compared to their non-connected counterparts. The similar result also found in Fan et. al (2007). Meanwhile, Fisman (2001) in his study in Indonesia and Faccio (2006) in analysis of 47 countries find a significant relationship between these two variables. In the context of Malaysia where business and politics are inter-related (Gomez and Jomo, 1997) indicated that, participation of politicians in GLCs might have effects on firm value as they act as a link between the governments and companys management. Therefore, it is hypothesized that, H4: There is a significant relationship between politician as director and firm performance 4.5 Government officials as board member in GLCs and firm performance GLCs are created partly to implement government policy objectives especially those established as a result of privatization exercises in the early eighties. Hence, most of their board of directors are civil servants either still in-service or formal government officials that act as eyes and ear of government as well as communication bridge between the management and the government. Agrawal and Knoeber (2001) in their study found that the politically experience directors that comprises former government officials benefits the company they served and noted that they are more prevalent in firms compare to others outside directors. In a related study in Singapore that involved 25 GLCs and 204 non-GLCs for the period from 1990 to 2000, Ang and Ding (2006) found that GLCs exhibit higher valuations than those of the non-GLCs in the area of profitability, efficiency and firms financial performance. Like Malaysian GLCs, Singapore GLCs also comprises government officials in their board. At suc h, it is hypothesized that, H5: There is a significant relationship between in service government official as director and firm performance H6: There is a significant relationship between former government official as director and firm performance 5.0 Research design and methodology 5.1 Data and sample design The first model in this research is designed to examine the impact of ownership structure on corporate performance of all GLCs listed on the main board of Bursa Malaysia Securities for the period of five years (2004 until 2008). To ensure that the sample clearly represented the population intended for the research and to harmonious the selected sample to the GLCs definition, the sample selection is based on the following criteria: At any time, one specific GLICs either at federal or states government level must be the single largest shareholder with at least 20% share ownership in one particular company on Main Board of KLSE and; The financial and unit trust companies are excluded as they are governed by different set of rules and acts that could affect the end findings of this study. In addition, all required financial data for the study period are to be available in databases (Datastream or Thomson Research) and information on ownership and corporate governance structure from companies respective audited annual report. The study constructs an unbalanced panel data of all GLCs during the study period. This approach has the advantage of attrition biases in correlation (Hu and Izumida, 2008). The observations period of 2004 to 2008 is chosen mainly because the period was the phase of economic stability in Malaysia when the countrys economy and capitals market activities fully recovered after the Asian Financial Crisis. The performance chart in Figure 2 below reveals that prior to AFC, the Kuala Lumpur Composite Index (KLCI) in average has been trading in an upward trend. However, the AFC push down the KLCI to below 600 during the peak of the crisis. The post-crisis period has seen steady increase in the value of the KLCI even though until 2006 Bursa Malaysia Securities still has some 200 companies trading at more than 50 percent discount to their book values (James, 2006). Another reason for the chosen period is to evaluate the impact of GLCs Transformation Program that launch in May 2004 by Malaysian government to improve performance of GLCs. 5.2 Methodology 5.2.1 The proposed model The following base model will be used to test the hypotheses that have been defined in the previous section: PERFORM = ÃŽÂ ± + ÃŽÂ ²1FG_GLC + ÃŽÂ ²2SG_GLC + ÃŽÂ ²3GOLD + ÃŽÂ ²4GOV_OWN + ÃŽÂ ²5POL + ÃŽÂ ²6GO_BOD + ÃŽÂ ²7EX-GO_BOD + ÃŽÂ ²8LOG_SIZE + ÃŽÂ ²9LEV + ÃŽÂ ²10BOD_SIZE + ÃŽÂ ²11BOD_MEET + ÃŽÂ ²12BOD_IND + ÃŽÂ µi Where; PERFORM = the dependent variables: proxy by ROA, ROE and Tobins Q; Independent variables: FG_GLC = GLCs under federal government (equal to 1 if a firm is under federal government, and 0 otherwise) SG_GLC = GLCs under state government (equal to 1 if a firm is under states government, and 0 otherwise) GOLD = GLCs which government owned one golden share (equal to 1 if a firm has governments golden share, and 0 otherwise) GOV_OWN = captures the percentage of government ownership in a GLC POL = captures the percentage of politician on the board GO_BOD = captures the percentage of government official in-service on the board EX-GO_BOD = captures the percentage of ex-government official on the board Control variables: LOG_SIZE = natural log of total assets as proxy of firm size LEV = firm leverage (total liabilities to total assets) BOD_SIZE = number of board of directors during the year BOD_MEET = number of board of directors meetings during the year BOD_IND = captures the percentage of independent directors on the board ÃŽÂ µi = error term 5.2.2 Operationalization of variable selection 5.2.2.1 The dependent variable The dependent variable in this study is firm performance that comprises accounting and market based performance namely return on assets (ROA)  [8]  and Tobins Q. They are to be employed in this study to measure the impact of ownership structure on corporate performance. The accounting-based performance is the most common types of performance measurement in assessing business performance. In this approach, annual report, which comprises income statements, balance sheets and statements of changes in financial position are the source of information to analyze companys financial performance for one particular financial year. This approach is very important for companys stakeholders such as potential investors since the indicator can help them in making investment decisions. It also vital in helping the companys shareholders to assess how well the company performed in market place in order to make decisions on management and employees rewards, setting suitable plans to sustain the goo d momentum or even take drastic approaches for company to remain in business. The accounting-based performance also helps manager to effectively plan and control in order to achieve the objectives of the company. For example, according to Thompson Yeung (2001), return on equity as one of the accounting-based measurements can accommodate the effect of different accounting procedures across industries and can minimize the multi-linearity between companys specific characteristics such as size, age and profitability. Both ROA and ROE are the most common measurement used in analyzing financial performance of companies and have been used widely in previous studies (Vafeas,1999; Abdullah,2004; Bhagat Black, 2002; Rahman Haniffa 2006; Ang Ding, 2006; Bhagat Bolton; 2008 and Chu, 2009). Since accounting-based performance measures the past and current performance of the firm, m