Transac�on cost theory
- The transac�on cost was from 1930s when Ronald Coase searching for the reason why
companies exist and grow bigger.
- Transac�on cost incurred when companies spend �me:
1. Searching (to find supplier)
2. Nego�a�ng (to purchase at the best price)
3. Agreeing a transac�on (to monitor quality of goods and services)
- This theory assume that director enter into agreements as this op�on will reduce uncertainty
as they have everything they need in the future.
- Enter into agreement, �me spend on sourcing / purchasing materials can be avoided.
- Corp Gov problem: directors managers making their life easier that the expense of
shareholder wealth.
o Director prefers lose flexibility searching for GS to have certainty. Thus, beter
opportuni�es may be missed by commi�ng long term agreements
o Cost will increase when comp hires someone else to run business.
Resources dependency theory
- Resources dependency theory define as reliance of company on external inputs such as
capital, energy, labour and materials.
- Theory : board exist as a provider of resources to execu�ves in order too help them achieve
organiza�onal goals.
- Basic proposi�on : Need for env linkages between company and outside resources.
- Director serves to connect company with external factor by:
1. Bringing resources needed to survive
2. Absorbing cri�cal elements of env uncertainty into company
- Env linkages could reduce the transac�on cost associated with env interdependency.
- Factors that intensify the character of this dependency
1. Importance of the resources
2. Rela�ve shortage of the resources
3. The extent which the resources in concentrates in the environment.
- Other resources: specialized skills, exper�se
- In summary: financial, human, intangible support, knowledge, exper�se.
Func�on of Securi�es Commission
- Based on Securi�es Commission Act 1993
1. To regulate the take-overs and merger companies
2. Regulate all mater related CM
3. Advise finance minister on all maters rela�ng capital market (CM)
4. Ensure provision of law is complied.
5. Encourage self-regula�on by pro ass or MI
-
Based on official website
1. To regulate the take-overs and merger companies
2. Regulate all mater related to securi�es and future contract
3. Supervising exchange, clearing houses, and central depositor
4. Licensing and supervising all licensed persons
5. Encourage self-regula�on
Func�on of Bursa Malaysia
- Monitor the compliance of public listed company towards the lis�ng requirement
- Responsibili�es CGD:
1. Formula ST, M and LT CG policies to achieve high standards
2. Strategize and implement to enhance standard of CG among listed issuers
3. Monitor std of CG, review exis�ng plans, and execute changes to raise std of CG
- Offer exchange related facili�es (lis�ng, trading, clearing, setlement)
- Ac�vely supervise the listed issuer and brokers
- Monitor trading ac�vi�es in marketplace.