Study of Perceived Audit Committee Effectiveness and Board Independence in Influencing Malaysian Bank Performance from the Investors' Perspective with Perceived Internal Control System Effectiveness as a Mediator

Ng, Xin Hui (2024) Study of Perceived Audit Committee Effectiveness and Board Independence in Influencing Malaysian Bank Performance from the Investors' Perspective with Perceived Internal Control System Effectiveness as a Mediator. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

In the wake of heightened public and regulatory scrutiny post-2008 financial crisis, banks face increasing pressure to streamline their assessment processes. The imperative for stable operations has been underscored by concerns over corporate governance’s role in amplifying risks, as evidenced by scandals like the Maxwell Publishing Empire and Enron. Concurrently, deposit rate hikes are putting pressure on margins, impacting bank profitability. Consequently, there is a growing recognition of the pivotal role strong governance plays in ensuring transparency, accountability, and the smooth functioning of global operations. To address these concerns, a quantitative research study was conducted, surveying 203 investors in Malaysian banks. The findings revealed that robust perceived audit committee effectiveness and board independence significantly bolstered perceived internal control systems effectiveness and, consequently, bank performance. This research not only identifies critical corporate governance factors for enhancing bank performance but also serves as a practical guide for Malaysian banks seeking to fortify the robustness of their corporate governance frameworks