Convergence of corporate governance in Malaysia and Thailand

Purpose - – The purpose of this paper is to examine whether there is a firm-level corporate governance (CG) convergence in two emerging economies, namely Malaysia and Thailand in post-Asian financial crisis periods, and how the level of convergence is moderated by different firm-specific factors. Design/methodology/approach - – Using data collected from annual reports of top Malaysian and Thai companies in two point of times 2005 and 2008, this research examines the attributes of board of directors to find the firm-level CG convergence. This study, based on prior literature, identified firm-specific factors to assess their moderating impact on the level of convergence. This paper exploits beta and sigma convergence technique to measure the CG convergence. Findings - – Results show that top Malaysian and Thai companies have developed internal CG practices in similar way with increasing board independent, separate board leadership, important board committees, board education, and participation in the post-crisis reform regime. Accordingly, there is a firm-level CG convergence within companies of an individual country, i.e. intra-convergence, and companies across the countries, i.e. inter-convergence. Notwithstanding, the study does not find the unconditional convergence in all CG variables. Additionally, it observes that the firm-level CG convergence is moderated by firm-specific factors. Practical implications - – Outcomes of the study have the implication to understand the complicated changing aspects of internal CG practices in emerging economies which, in turn, can help to formulate and implement effective CG structure so that firms can tackle adverse effects of any further economic crisis. Because this paper highlights that the firms in these emerging economies have enough room yet to improve their CG practices to become internationally competitive. Originality/value - – This paper demonstrates how internal CG practices may evolve and converge in emerging Southeast Asian economies. Results related to moderating factors of firm-level CG convergence contribute in literature by exploring a new dimension of CG convergence.