The Perception of SMEs towards the Corporate Governance in Malaysia

Abstract

Today's industry players, regulators, investors, and researchers agree that boards of directors play an essential role, and this consensus has led to widespread recognition of the significance of this role.  Since the financial crisis in 1997 and 1998, researchers in Asia have begun to focus on this topic. Guidelines for effective corporate governance practices have been developed and published by several developed and developing nations and international organizations.  On the other hand, most of the policies focus on publicly traded companies rather than small and medium-sized businesses (SMEs). There is a requirement for an excellent corporate system to be in place in any organization, regardless of its size, to ensure transparency, accountability, and the disclosure of all relevant financial information. This is necessary to keep the organization in a state of equilibrium.  This research examines the perception of small and medium-sized enterprises (SMEs) regarding the crucial role of governance in business and their assessment of the significance of different duties and responsibilities assigned to boards of directors. Given the substantial impact of boards of directors on the success of businesses and the contribution of SMEs to the growth of the Malaysian economy, understanding SMEs' perspectives on governance is essential. The researchers developed the questionnaire based on prior research and existing corporate governance guidelines.  Random sampling was used to collect data for this study.  Two thousand questionnaires were handed out, but only 1,449 small and medium-sized businesses (SMEs) filled them out.  The findings indicate that SMEs are aware of the critical role of corporate governance players and the responsibilities that come with that role. On the other hand, the regulators need to devise effective corporate governance practices for SMEs.