Does ownership important? And what are its influences for governance of firms and its impacts on firm performance in Malaysian listed trading and service companies? For the last twenty years, the issue of ownership has received great attention and large amount of researchers have been addressed it, especially in the developed countries like the the United States (US), United Kingdom (UK), Europe and others. Despite that, Malaysia as one of the emerging markets, the issue of ownership structures has also aroused public concern, especially right after the Asian financial crisis in 1997. Ownership of the firm means the rights of the owner on that firm and the structure of ownership in different businesses or countries is relatively different (Hu & Izumida, 2008 and Chen & Yu, 2012). Compared with the ownership structure in Western countries, Malaysia’s corporate ownership is usually concentrated such as Tan Chong Motor Holdings Bhd. For instance, in Malaysian companies, families hold about 44.7% of their shares (Carney ; Child, 2013) and this is supported by the findings of Amran and Ahmad (2013). Moreover, in conventional business corporation, the owner of the business will be the one who invested in capital while the businesses that are in consumer retail cooperative, wholesale business, public utility cooperative, mutual banking institution and others are actually owned by their customers. In contrast, the business in service industries are not owned by anyone. Usually, there is a significant relationship between ownership and firm performance.
Furthermore, governance of a firm means the a series of code that control the firm and its purpose is to balance the stakeholders of the company such as customers, suppliers, managers, shareholders, government, financiers and the communities. The issues related to corporate governance are not fresh or recent because they occur simultaneously with the birth of the company. In the aftermath of the 1997 financial crisis, governance of firms has also became an attractive topic for Asian researchers. According to Zabria, Ahmad ; Khaw (2016), Finance Committee on Corporate Governance in Malaysia has defined corporate governance as ‘the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective.’ From an economic point of view, corporate governance plays an crucial role in achieving efficiency, shifting scarce resources such as capitals to a higher performance of firm. Corporate governance mechanisms are divided into two categories namely internal mechanisms and external mechanisms. The examples of internal mechanism are board size, board structure, board of directors, independence of board and others while the examples of external mechanism are management labour and talent markets, competitive market conditions, corporate control markets and others.
In this Industrial Revolution Era, Malaysian firms have to strive hard to compete with each other in order to ensure that they can remain on the top and to be competitive. But sometimes, the firm performance can be affected by other factors that are uncontrollable. Since ownership in Malaysia varies by management, concentration, foreign and government ownership, we will definitely have different impacts on performance of firm from the expected results. However, there are only few empirical studies were conducted on ownership, firm governance and corporate performance in the Malaysian trade and services sectors where mostly were outdated. Thus, based on the background of Malaysia, more researches on this title should be carried out so that it can contribute to the growing literature on ownership, governance of firm and firm performance in the aspect of Malaysia and also as the references for the Malaysian firms.