Proving the agency theory; Combining the CGM, FFP with a mediation of Kaszanak's and Kothari's model
This research examined the effects of corporate governance mechanism (separate leadership, nomination committee independence) on shareholder value, and also the ability of the reporting quality to mediate the relationship between corporate governance variable (separate leadership and nomination committee independence) and shareholder value. In this study, separate leadership and nomination committee independence are independent variable, shareholders value (share price) is dependent variable and reporting quality is mediating variable. We postulate renowned agency theory in relation to Corporate Governance (CG) mechanism, shareholder value and reporting quality. We estimate shareholder value through share price while reporting quality is measured through modified Jones model. However, market capitalization has no impact on shareholder value (share price). Moreover, reporting quality has significant impact on the relationship of separate leadership and shareholders value with a full mediation. This research examined because of the objection on corporate governance mechanism to test its ability to predict for improving shareholder value within Malaysian listed companies. Moreover, this paper also provided the mediating evidence in the form of reporting quality for molding the relationship between corporate governance mechanism and shareholder value This result hinted out that corporate governance attributes also very much important for increasing shareholder value and shareholder confidence in the country. The results of the study has value for Malaysian government, policy makers, corporate boards, stock exchange and shareholders by highlighting the distinct impact of corporate governance mechanism and its relation with board of director meeting, audit committee independence, cross holder ownership and board size in the context of global firm financial crises throughout the world and Malaysia.