Dr. Lee Wan Ling
Area of Research

Corporate Finance, Corporate Governance

Research Topic
  1. The Role of Datuk directors in Malaysia

  2.  Market Reaction towards the Malaysian Code on Corporate Governance

International Collaboration (please mention the Names of co-researchers, their university, and funding bodies if appropriate)

  1. Professor Laurent GERMAIN (Toulouse Business School, France)

  2. Professor Nadine GALY (Toulouse  Business School, France)

Statement of Problem

The Role of Datuk directors in Malaysia

The purpose of this study is to gain insight on how the presence of Datuk in the board adds value to the board function and further, improves the firm financial performance. This study is unique as we explore the relationship of Datuk directors with the governance of firms which has not been done before. We believe that Datuk directors may have impact on the firms because they possess with the human capital, social capital, networks and some other attributes that are important to the firms. Moreover, societal power derived from a position of influence in society- a well-respected and connected member of society may be able to influence decisions to the company’s benefit and public opinion about company activities. As a pioneer attempt to study the about the Datukship on board, we are curious about the proportion of Datuk and its impacts on board. We ask the research questions, such as: how many of them are independent? What is the percentage of Datuk directors in board committee? Is Datuk associated with less board meeting attendance due to their busy schedule? What company has more or less or even no Datuk directors on the board? Does Datukship bring into their value and worth in a board and thus, improve firm performance?

Market Reaction towards the Malaysian Code on Corporate Governance

The aim of this study is to measure the overall market reaction to the implementation of new corporate regulation, which is the Malaysian Code on Corporate Governance. Under the semi-strong version of the efficient market hypothesis, the price of the stock reflects completely all the publicly-available information and there is no possibility to earn economic profit on the basis of this information. Thus, only some unanticipated events can change the stock price.

If the new regulation (the Code) can produce an abnormal movement in the price of the stock in the market, this corporate governance reform is claimed to have an impact on the market. If the implementation of the Code brings abnormally positive stock returns, this would suggest that the investors consider the information conveyed in the new Code as good news for the market.

Research Method

The Role of Datuk directors in Malaysia

Firstly, we present descriptive statistic of the percentage of seat held by directors who have titles, their independency, their roles in board committees and attendance behaviours for meetings. Next, we test the relationship of Datuk directors with Tobin’s Q and ROA using the instrumental variable technique to avoid specification problems (Tuschke and Sanders, 2003). We use lagged performance to control for the possibility of endogeneity. Besides, we also include a few control variables which have been previously employed. Omitted firm characteristics could lead to endogeneity (Adam and Ferreira, 2009) thus; firm fixed effects are included to deal with omitted unobservable variables. Finally, we run the regression by using Tobin’s Q, ROA as separate dependent variables, with fraction of Datuk director as independent variables and with board size, firm size, lagged performance as control variables.

Market Reaction towards the Malaysian Code on Corporate Governance

Using an event study methodology demonstrated by Karafiath (1998), the paper concentrates on the announcement effect of those key dates associated with the rules-making process, until the integration of the Code to the listing requirement. We group the firms into different industry portfolio and different portfolio of size to test the abnormal returns. We then examine specifically the impact of the reform on government-linked companies (GLCs), which are always been claimed to have influence from government on its corporate governance practices. In this study, we use the model presented by Karafiath (1988), and further used by Lamdin (2001).

Peer-reviewed publications in the last three years


Year of Publication


Name of the book/ Journal/ Conference with details of Volume and Issue

The Corporate Governance Reform in Malaysia: Board Size, Independence and Monitoring


Wanling Lee, Laurent Germain, Nadine Galy

Journal of Economics and Business

Market Reaction to the Malaysian Code on Corporate Governance


Wanling Lee, Laurent Germain, Nadine Galy

Pacific-Basin Finance Journal

(under reviewing)

The Role of Datuk Directors in Malaysia


Wanling Lee, Laurent Germain, Nadine Galy

Working Paper


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