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Centre for Finance Working Paper Series
Working paper 2009 002
Changes in Malaysia: Have Political Connections Lost Their Value?
Heather Mitchell and Saramma Thomas Abstract During the 1997 Asian currency crisis and resulting imposition of capital controls in
Malaysia, evidence from previous studies shows that firms with political connections
suffered more during the crisis but benefited more when capital controls were
introduced. In the period since then, the evidence shows very little significant
difference in performance between firms with political connections and those without.
This period not only includes the relaxation of capital controls but also the resignation
of Tun Dr Mahathir Mohamad as prime minister and the handover of control to Datuk
Seri Abdullah Ahmad Badawi.
2
1. Introduction
On the 1st September 1998 the Prime Minister of Malaysia, Tun Dr Mahathir
Mohamad, surprised financial markets by introducing a raft of capital control
measures. This was done against the advice of the Malaysian central bank and was
unlike approaches taken by Korea, Indonesia and Thailand. It was also contrary to
pronouncements by the Deputy Prime Minister and Finance Minister Datuk Seri
Anwar Ibrahim, who was dismissed the following day and later jailed on charges of
corruption and sexual misconduct.
The official reason given for the capital controls was that the panic caused by the
Asian financial crisis was creating severe problems for Malaysia, which would be
stabilised by restricting the free flow of funds. Malaysia’s acting central bank
governor, Zeti Akhtar Aziz said these measures were required to “minimise the impact
of a possible economic crisis and a breakdown in the international financial system”1.
This reasoning is supported by Krugman (1998), who argued that capital controls
should be used to stabilise economies during the currency crisis, even at the risk of
increasing corruption and cronyism.
Many studies have examined the introduction of these controls, both on Malaysia’s
economic recovery and on firm performance. In this study we consider the impact of
the removal of these controls on firm performance as well as the changes in political
leadership. In particular we look at differences in firms’ performance based on their
1 Quoted in the International Herald Tribune by Fuller (1998).
3
connections to government. We examine both firms with “crony” type connections
and those owned in part or whole by the government.
In their 2003 study Johnson and Mitton examined the performance of individual
Malaysian firms over the crisis period, and compared the performance of firms with
political connections to those without. They also compared the performance of firms
connected with Mahathir with those connected with Anwar. This showed that
strongly politically connected firms suffered more at the beginning of the crisis, when
government subsidies were reduced. After capital controls were introduced firms
with good political connections increased relatively more in value. “The evidence
suggests Malaysian capital controls provided a screen behind which favoured firms
could be supported.2” They found that 32% of the increase in firms’ value could be
attributed to their political connections.
Faccio, Masulis and McConnell (2006) examined the relationship between political
connections and corporate bailouts by governments using a cross-country study with
data from 1997 to 2002. They found that of the 51 bailouts of politically connected
firms, 17 happened in Malaysia while only three of the 20 non-connected bailouts did.
This discrepancy was so large the authors felt obliged to re-estimate their models
without Malaysia, in case this was driving their results. They found that political
connections significantly increased the probability of a firm receiving a government
bailout. They also found that, of the firms that did receive bailouts, the unconnected
firms were performing significantly better than the connected firms after two years.
This adds weight to Jonson and Mitton’s (2003) finding that political connections in
Malaysia added value to firms.
2 Johnson and Mitton (2003) p351 abstract
4
The connection between capital controls and cronyism has been made by other
studies. Rajan and Zingales (1998) contend that without transparency and a strong
legal contract system, relationship based financial systems are likely to be preferred to
arms length systems. They argue that if a free capital market exists with the
relationship based system, overseas investors will be unwilling to invest long term
because of the lack of transparency, increasing the risk of a financial crisis.
Rodrik and Kaplan (2001) argue that the Malaysian recovery was better than it would
have been without the capital controls, by comparing its recovery with those countries
that followed the conventional IMF approach in the region. They also claim that the
flow of funds out of Malaysia would have increased dramatically after the sacking of
Anwar had the controls not been in place.
Choudry (2005) examined the betas of ten Malaysian stocks and ten Taiwanese stocks
for time variation and found significant variation in the betas over the crisis period.
Three of the Malaysian stocks had political connections. He found differences in
behaviour between the different stocks but the sample was too small to make any
generalisations.
In the finance industry, Chong, Liu and Tan (2006) showed there was considerable
evidence of cronyism in the program of forced mergers instituted by the government.
This was evident in the selection of acquiring and target banks and it was found that
the mergers overall destroyed aggregate economic value.
5
Since the introduction of capital controls there have been major political changes in
Malaysia, the most important being the resignation of Dr Mahathir and his
replacement by Datuk Abdullah Ahmad Badawi on 31st October 2003. Johnson and
Mitton (2003) name Mahathir as being a primary political connection to twelve firms
based on the book by Gomez and Jomo (1997). In contrast Badawi is not named in
connection with any firm. In fact the only reference to him at all in the Gomez and
Jomo work was to claim he had been discriminated against by media companies
politically connected to Anwar. More recently though there has been some implied
connections through his son-in-law Khairy Jamaluddin.3 In late 2005 Jamaluddin was
sold approximately 13 million shares in ECM Libra Avenue at a discounted price. He
later “voluntarily” divested himself of the shares at a loss of around 200,000 RM.
The capital controls have been gradually reduced and the exchange rate was peg was
removed on 21st July 2005. In the following section we look at the changes that have
occurred in Malaysia since the currency controls were introduced and discuss their
likely effect on firm performance. We consider both the relaxation of the currency
controls and the change in political leadership, both of which are likely to
disadvantage politically connected firms. In section 3 the data is described and in
section 4 the results of the analysis are presented. The final section gives the
conclusions.
2. Changes in Malaysia
Our study starts one month after the introduction of the capital control measures on
the 1st September 1998. These measures pegged the Malaysian ringgit to the US
3 Jamaluddin had previously been in a relationship with Anwar’s daughter, but the relationship ended
with Anwar’s fall from power.
6
dollar at a rate of RM3.80 to one US dollar. Portfolio investors were restricted from
repatriating funds invested in Malaysia until 1st September 1999. Offshore trading of
ringgit was not permitted and the ringgit was no longer legal tender outside Malaysia.
This resulted in the downgrading of Malaysia’s sovereign debt ratings by international
credit rating agencies. Major international agencies including Dow-Jones, the
International Finance Corporation (IFC) and Morgan Stanley removed Malaysia from
their investment benchmarks.
The first period we consider in this study is from the 1st October 1998 to the 30
th
September 2000. We call this the restructuring period and is the last period
considered by Johnson and Mitton (2003)4. The period saw a decrease in controls on
capital movement but forced mergers among financial firms.
During the restructuring period capital controls on portfolio outflows were eased
following increasing economic stability. In February 1999, the 12 month holding
period restriction on portfolio investment repatriation was replaced by a two-tier exit
levy. On 21st September 1999, the graduated exit levy was eliminated in favour of a
uniform tax of 10 percent on profit repatriated. As a result Malaysia’s sovereign
ratings were upgraded at the end of 1999. Malaysia was reinstated in the Dow-Jones
Investment indices and the IFC indices in November 1999 and later the MSCI in May
2000.
In this same period a forced merger scheme for financial institutions was introduced.
When this was first announced by the Malaysian central bank, Bank Negara Malaysia,
4 Although the period is the same, our sample of firms is different as Johnson and Mitton used the
Worldscope database while we are using DataStream.
7
on 29th
July 1999 six anchor banking groups were proposed and the mergers were
required to be completed by the end of 1999. After strong protests the number of
groups was increased to ten, from the existing 54 domestic banking institutions,
institutions were given until the end of January 2000 to find partners and the merger
agreements were concluded by August 2000.
This leads us to our first two hypotheses:
Hypothesis 1: For non-financial firms, politically favoured firms should
underperform outsiders as the shield provided by the capital controls is reduced
during this period.
Hypothesis 2: Politically favoured financial firms should outperform others as they
are more likely to benefit from the forced mergers during this period.
Our second period starts on 1st October 2000, the end of the Johnson and Mitton
(2003) study and ends on the 21st June 2002, the day before Mahathir’s resignation
speech. We call this the consolidation period and there were few major changes
during this time. In February 2001, the 10 percent exit levy for portfolio capital
profits repatriated after 12 months was abolished and on 2nd
May 2001 it was
completely removed. Our next hypothesis then is:
Hypothesis 3: There is no significant difference in performance between politically
favoured firms and others during the consolidation period.
The third period, which we call the transition period starts on the 22nd
June 2002 the
day of Mahathir’s resignation announcement and ends on 30th October 2003, the last
day of his prime ministership. Mahathir unexpectedly announced his resignation at
8
the UMNO General Assembly. His party members persuaded him to stay for another
18 months to enable a planned handover to his deputy Badawi on 31st October 2003.
After 22 years in office, he was awarded the highest honour (in Malaysia) “Tun”. As
this news was genuinely unexpected and ended a stable period of government we
propose the following hypotheses:
Hypothesis 4: Firms with no political connections will show a decrease in
performance over this period.
Hypothesis 5: Firms with a connection to Anwar will not be as adversely affected as
other firms.
Hypothesis 6: Firms with a connection to Mahathir will show a larger decrease than
average.
We have data on 16 firms with connections to Anwar but only on four firms with
specific connections to Mahathir so we cannot reliably estimate the effect of this
connection. As a result Hypothesis 6 has been modified to:
Hypothesis 6a: Firms with an unofficial political connection which does not include
Anwar will show a larger decrease than average.
As the markets were likely to be reassured by the gradual 18 month handover, instead
of the immediate resignation that was originally proposed, we will consider the first
month of this period separately.
The next period from the 31st of October 2003 until the 21
st July 2005 starts with the
handover of power to Badawi and ends with the removal of the currency peg. We call
this the resolution period. Badawi was appointed Deputy Prime Minister in 1998.
Upon becoming Prime Minister he promised to tackle corruption. Anti-Corruption
agencies have been given more power. Several public figures from the Mahathir era
9
have been arrested for corruption. Although Badawi won his rival Anwar’s job, he did
not interfere with the Federal Court’s decision to overturn the conviction for sodomy
and consequent release from prison in September 2004.
In 1988 three government institutions were set up to help stabilise the financial sector.
All ceased operations around this time. The Corporate Debt Restructuring Committee
(CDRC) was set up to provide a platform for both borrowers and creditors to work out
feasible debt restructuring schemes without having to resort to legal proceedings. It
resolved 48 debt cases amounting to RM52.6 billion. This formed 65% of the cases it
undertook. It ceased operations on August 15, 2002 (Bank Negara Malaysia 2002).
Danamodal recapitalised banks. It provided funds of RM7.6 billion to ten banking
institutions. From this RM6.6 billion was recovered in 2003. The balance of RM1
billion in one institution was divested in 2004 (Bank Negara Malaysia 2004). Finally
Danaharta discounted and bought bad loans from banks. It acquired RM50 billion in
loans and was able to recover 59% of the loans acquired by December 2005 when it
ceased operations. These and the removal of the currency peg completed the removal
of the emergency measures put in place during the Asian financial crisis.
Because of the removal of these measures and the attempts to reduce corruption, we
would expect the value of political connections to decline over this period. As most
of the assistance measures that ended during this period assisted banks, we would
expect financial firms to be more adversely effected. This leads to our next
hypothesis:
Hypothesis 7: Politically favoured firms should underperform others during the
resolution period, with financial firms performing worse than others.
10
The final period starts on the 22nd
July 2005 and ends on 30th
June 2006. It is
included primarily for comparison. Although Mahathir held no official position in the
government, he was still active. He was an adviser to Petronas (National Oil
Company) and Proton (The National Car Company). He also commented on political
events, notably on the 7th
June 2006 he criticised the present Prime Minister and the
government’s decision to scrap the Johor-Singapore causeway replacement (Sujata,
2006) however his position did not receive the usual press support it would have
while he was prime minister. His influence seems to have declined as the new
leadership has consolidated its power and tends to ignore his pronouncements. This is
unlike the situation in some other countries, notably Singapore, where the retired
leader still wielded considerable influence. Our final hypothesis is:
Hypothesis 8: There is no significant difference in performance between politically
favoured firms and others during the final period.
Hypothesis 9: Firms with unofficial political connections with be more strongly
affected by these events during the restructuring, resignation and resolution periods
than Government Linked Companies or Khazanah firms.
With the exception of the resignation of Mahathir and possibly the exact date of the
lifting of the currency peg, the changes discussed above were gradual and well
anticipated by the market. As a result we do not expect to see the same dramatic
changes in value found by Johnson and Mitton (2003) after the imposition of currency
controls.
3. Data
11
We use data on 625 firms that are listed on the KLSE main board5 and have data
available on DataStream. Data on all firms is not available for the whole period. We
calculate monthly returns, inclusive of dividends, based on Malaysian ringgit. We use
raw returns rather than risk adjusted because we would need to use betas calculated
during the crisis period, which are likely to be highly variable during the crisis period
and unlikely to be representative of post-crisis behaviour. This is confirmed by
Choudry (2005) who found evidence of time variation of betas over the crisis period
in a sample of Malaysian stocks. To compensate for this use of raw returns we use
firm specific factors such as firm size, leverage and industry type as control variables
in the regressions. In this, and the selection of firm specific factors, we follow
Johnson and Mitton (2003).
Over the period of this study we would expect firms connected to Mahathir and his
associates to perform less well, both through loss of political patronage and because
of the reduction of the screen provided by capital controls. To determine which firms
have unofficial or “crony” type connections we use the list from Johnson and Mitton
(2003). These are given in the appendix. These connections are based on personal
relationships often developed with rising politicians were not determined by the
nature of the firm. Such connections had already lasted many years before the 2003
study and can be expected to be largely in place, with the possible exception of
Anwar-connected firms. Johnson and Mitton (2003, p 354) state that in 1999,
“Anwar-connected firms were either taken over by Mahathir-connected firms or their
owners switched allegiance to Mahathir.” For this reason we treat these firms as a
5 Second board firms are not used as information on political connections is not available for the firms
provided by DataStream.
12
single class, however we look at possible differences in performance depending on
their connections during the period immediately following Mahathir’s resignation.
As well as comparing these with politically unconnected firms, we also compare these
to the official “Government Linked Companies” (GLC). “GLCs are defined as
companies that have a primary commercial objective and in which the Malaysian
Government has a direct controlling stake. Controlling stake refers to the
Government’s ability (not just percentage ownership) to appoint BOD members,
senior management, make major decisions (e.g contract awards, strategy,
restructuring and financing, acquisitions and divestments etc. ) directly or through
GLICs”6. Khazanah Nasional Berhad
7 is the national government’s investment arm
and has shareholdings in many of these companies. We would expect both these
types of firms to benefit more than those with an unofficial political connection or no
connection as the government could claim a public interest in preferential treatment of
these firms.
All financial variables are measured in ringgit. Firm size is measured using the
natural log of total assets and growth is the percentage growth in total assets in the
previous year. Return on assets is net income (for financial firms) or net sales (for
non-financials) divided by total assets. Profit margin is net sales or net revenues
divided by operating income in percentages. The current ratio is measured as current
6 http:// www.khazanah.com.my/faq.htm#ques6 accessed 4
th September 2006.
7 Khazanah Nasional Berhad is the government’s investment arm and was incorporated as a public
limited company on 3rd
September 1993 commencing operations a year later. The Minister of Finance
owns all shares, except for one owned by the Public Land Commissioner. (Information from company
website)
13
assets divided by current debt and the quick ratio as cash and equivalents plus
receivables divided by current debt. Assets turnover is net sales divided by total
assets and inventory turnover is net sales divided by total inventory. Leverage, or the
debt ratio, is measured as the ratio of total debt to total assets and short term debt is all
debt with a maturity of less than one year. Book to market ratio is the book value of
the share divided by the market value. All variables are constructed using data from
the DataStream database.
For the industry dummy variables included in the regressions, we used the twelve
classifications provided on the KLSE website, but some categories were merged
because of the small number of firms which had data available. For at least some of
the periods data was only available for one or two firms, making the use of an
industry dummy impossible or at least very inefficient. Mining was merged with
construction, real estate with property and hotels, infrastructure and technology with
services.
Firms’ political connections have been classified using three different criteria. The
first are those firms having unofficial political connections, based on the work of
Gomez and Jumo (1997) and the other two groups have formal government
connections. The first of these are Khazanah (KNB) firms, which have some degree
of government ownership. The second are government-linked firms (GLCs), which
have a formal acknowledged relationship with government. As part of this
relationship they offer economic advice to government through round table
discussions and agree to undertake activities considered to be in the public interest.
There is a degree of overlap between the three groups. The largest is between GLC
14
and KNB firms, with seven of the twenty GLC firms also being KNB. In the analysis
that follows we consider the three groups separately. A list of connected firms and
their type of relationship is given in the appendix.
4. Results
Table 1 shows the result of the preliminary analysis. We consider returns on the
companies over the five different periods and look at the financial variables at the
start and end of the period.
(Insert Table 1 about here)
The first panel the returns in each of the periods. These are generally consistent with
the returns on the KLSE price index except for the resolution period where the index
shows a small positive return. Unlike the KLSE price index, which is weighted by
market capitalisation, our return is an unweighted average, which would account for
the difference.
The results from the first restructuring period are consistent with the corresponding
period from Johnson and Mitton (2003), in that both connected and unconnected firms
have large positive returns and there is no significant difference between returns for
the two sets of firms.
In the following consolidation period we hypothesised there should be no significant
differences between politically favoured firms and others. This is supported for the
informal connections and GLCs. During this time Khazanah firms have significantly
higher average returns than non-Khazanah firms, with the former firms having
positive returns while the later had negative returns on average.
15
During the first month of the resignation period all groups of firms have negative
returns. We find that GLC firms are more badly affected than non-GLCs during the
first month, but over the whole of the resignation period there is no significant
difference. The informal political connections and Khazanah firms show no
significant difference in the first month, but they are marginally outperformed by the
unconnected firms over the whole period.
The returns in the resolution period do not support the hypothesis that politically
connected firms underperform during this period. The only significant difference
shows GLCs outperforming unconnected firms, contrary to expectations.
In the final period we see firms with informal political connections outperforming
those without, again contrary to our hypothesis. There are no significant differences
between the firms with formal connections and those without.
On examining the second panel of Table 1, which give the financial figures, we find
that the connected firms are much larger than the unconnected ones, regardless of the
nature of the connection. The growth rates for the firms with unofficial political
connections are smaller than those without. These findings are similar to those
Johnson and Mitton (2003) found at the start of their study period. In contrast we find
that firms with government ownership (Khazanah) are growing more quickly than
non-Khazanah and there is no significant difference in the growth rates of GLCs and
others.
16
We find that firms with unofficial political connections are less profitable and there is
some evidence this applies to Khazanah firms, though GLCs are more profitable. In
all cases the connected firms are less liquid than the unconnected ones. The results
for the asset utilisation, or efficiency, measures are mixed. There is some evidence
that firms with unofficial connections are more efficient and strong evidence that
GLCs are less efficient. The unofficially connected firms and Khanazah firms are
more highly leveraged than others and their leverage is increasing more quickly, but
there is no significant difference for GLCs. In all cases the ratio of short term to long
term debt is higher for the unconnected firms but the increases are higher for
unofficial connections and lower for Khazanah firms. The book-to-market ratios are
below one for all groups of firms8, suggesting they are overvalued relative to book
value. There are no significant differences between groups of firms.
To determine if the differences noted above result from underlying differences
between the connected and unconnected firms or can be explained by factors such as
size or industry sector the regressions given in Table 2 were estimated. In this and all
following regression models we use White heteroskedasticity adjusted standard errors
and t-statistics.
(Insert Table 2 about here)
We control for industry factors using industry dummy variables and size using the
natural log of total assets. We measure profitability using return on assets (ROA) and
estimate the following model:
8 These are significantly less than one for all firms except those with unofficial political connections.
Test statistics are not reported here but are available from the authors on request.
17
∑=
+ +++++++=81
,5543210 )ln(toj
iijjiiiiii eIDGrowthTAKNBGLCJMROA βββββββ
(1)
Here JM, GLC and KNB are dummy variables for the three types of political
connection, TA is total assets and the IDs are the industry dummy variables. The
model for leverage is
iiiiiii ROAGrowthTAKNBGLCJMLEV 6543210 )ln( βββββββ ++++++=
∑=
+ ++81
,6
toj
iijj eIDβ . (2)
Leverage is measured using total debt divided by total assets. Regression models
using the same explanatory variables as equation (2) are estimated for liquidity, using
the current ratio as the dependent variable, and efficiency, using the inventory
turnover ratio as the dependent. As financial firms are expected to behave differently
to others, wherever sufficient data are available, models are estimated separately for
financial and non-financial firms.
None of the dummy variables for the unofficial connections or the GLCs are
significant in any of the regressions. This shows that these firms did not perform
significantly differently at the start of our study period. The results are different for
the non-financial government owned firms. These have higher leverage, lower
profitability and lower liquidity even after firm size and industry factors are taken into
account. As a result any differences between these Khazanah firms and others in the
following analysis cannot be confidently attributed to their political connection.
In Tables 3 to 7 we estimate models to assess the impact of political connection over
the different periods, using the following equation:
18
∑=
+ +++++++=81
,5543210 )ln(toj
iijjiiiiii eIDLEVTAKNBGLCJMRET βββββββ .
(3)
For the regressions for financial firms we do not include the GLC or KNB dummies as
there are insufficient financial firms in these categories. We also run regressions
using a single dummy variable which is one for firms that have any type of political
connection.
Table 3 gives the results for the restriction period immediately after the imposition of
currency controls. It shows no difference in performance between connected and
unconnected firms. Johnson and Mitton (2003) found evidence that their connected
firms had significantly higher returns than average in the month immediately
following the imposition of capital controls, September 1998. Our estimation period
starts in October 1998 and finds no evidence of either higher or lower returns for
these firms. This suggests that though there was a one-off increase in the value of
these firms, they have not out performed unconnected firms on a continuing basis, but
neither have they lost that increase.
(Insert Table 3 about here)
We had hypothesised that politically connected non-financial firms should
underperform others during this period and financial firms should outperform others.
Neither of these hypotheses is supported by the regressions as none of the politically
connected dummy variables are significant in any of the regressions.
(Insert Table 4 about here)
19
The results for the consolidation period leading up to Mahathir’s resignation are given
in Table 4. We hypothesised that there would be no significant difference in firm
performance between connected and unconnected firms. This is supported for non-
financial firms, but not for the finance firms, which show a decrease in performance
in Panel A. The results in Panel B show the effect of the particular connection type.
Unfortunately there are so few GLC or Khazanah financial firms that dummy
variables could not be used for these. When the unofficial political connections only
are considered there is no significant difference in performance. The GLC firms
show no significant difference in performance when the financials are excluded, but
do perform worse when they are included. The Khazanah firms perform slightly
worse when the financials are included than when they are excluded, but the
difference is not significant. This suggests the significant negative result is driven by
the four large GLC financial companies9. Surprisingly we find that the Khazanah
non-financial firms outperform the others.
(Insert Table 5 about here)
For the resignation period results in Table 5, we have included dummy variables for
non-Anwar and Anwar connected firms. A firm is classified as Anwar if one of the
connections listed in the appendix is Anwar. If a firm has an unofficial political
connection that does not include Anwar, it is designated as non-Anwar. Although it is
believed that most Anwar connected firms realigned themselves after his fall, it is
possible that some taint of the connection remains which is most likely to show with
the resignation of Mahathir. A separate analysis was carried out for the first month of
this period as this was when Mahathir announced his shock resignation.
9 These are Affin Holdings, BIMB Holdings, Malayan Banking and Malaysia Building Society.
20
In the first part of this table we find that non-finance GLCs underperform all other
firms when the whole period is considered. This is the only variable that affects
returns. Even the control variables of firm size and leverage, which are generally
significant in the other regressions, have no significant impact here.
The second part of the table gives the results for the first month only. In all the
regressions the intercept is negative but only significant for the non-finance firms,
which does provide support for Hypothesis 4, that firms will underperform during this
period. Again GLC firms underperform the other firms. The non-Anwar coefficients
are not significant, indicating that Hypothesis 6a, that firms with political connection
that do not include Anwar will be more adversely effected than other firms is not
supported. There is some evidence to support Hypothesis 5, that Anwar firms will be
less adversely affected. The coefficient for the Anwar dummy variable is marginally
significant for the model including all firms. By comparing the results for the non-
finance and finance firms, it is clear this result is driven by the finance firms, which
has a very large and significant positive coefficient, while the non-finance firms is
positive, but relatively small and insignificant. This result needs to be treated with
caution though, as there are only three finance firms with Anwar connections.
(Insert Table 6 about here)
For the penultimate period given in Table 6 we hypothesised that firms with unofficial
political connections should underperform others, with financial firms faring even
more badly. The coefficient for the non-financial firms, while negative, is not
significant. That for the financial firms is both negative and significant, giving partial
support to our hypothesis.
(Insert Table 7 about here)
21
In the last period we had hypothesised that there should be no difference in firm
performance for the different classes of firms. The results in Table 7 show this to be
the case, with none of the connection dummy variables being significantly different
from zero.
5. Conclusions
In their 2003 study Johnson and Mitton found evidence that politically favoured firms
outperformed unconnected firms in the period immediately after the imposition of
capital controls. In this study we consider not only firms with unofficial crony
connections, but also firms with official links to government, Government Linked
Companies, and firms with some portion of government ownership, Khazanah firms.
We find little evidence that firms with any type of political connections either
underperform or outperform unconnected firms in the extended period during which
capital controls were introduced, or during the change of leadership from Mahathir to
Badawi.
One result showed that politically connected financial firms outperformed all others
during the period immediately following Mahathir’s resignation. This result was
driven by three firms which had connections to Anwar. This suggests that these firms
expected to be treated less unfavourably under a change of leadership, but the sample
is too small for confidence.
Khazanah firms perform differently to other groupings. They were less profitable,
less liquid and more highly leveraged, even after factors such as firm size and
22
industry sector were taken into account. Despite this they outperform other firms
during the consolidation period.
A further significant result was that politically favoured financial firms
underperformed others during the second last period, when the institutions set up to
assist banks were wound up.
Our study shows very little value in any sort of political connection once the
immediate effect of the introduction of capital controls had dissipated, which seems to
have occurred after one month. Any effects that did remain were confined to the
finance industry. The value of crony connections was no longer evident and this
effect was apparent even before Mahathir left office.
Acknowledgments:
The authors would like to thank Prof Richard Heaney and an anonymous referee,
whose comments have greatly improved this paper.
23
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Chong, B.S., Liu, M.H., Tan, K.H., 2006. The wealth effect of forced bank mergers
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Choudry, T., 2005. Time-varying beta and the Asian financial crisis: Evidence for
Malaysian and Taiwanese firms, Pacific-Basin Finance Journal 13 (1), 93-118.
Fuller, T., 1998. Malaysia clamps down on currency trading, International Herald
Tribune 2nd
September
Gomez, E.T., Jumo, K.S., 1997. Malaysia’s political economy: Politics, patronage and
profits, First Edition, Cambridge University Press, Cambridge.
Johnson, S., Mitton, T., 2003. Cronyism and capital controls: evidence from
Malaysia, Journal of Financial Economics 67, 351-382.
Kaplan E., Rodrik D., 2002. Did the Malaysian capital controls work?, in: Edwards,
S., Frankel, J.A. (Eds), Preventing currency crises in emerging markets, University of
Chicago Press. pp. 393-440.
24
Khazanah Nasional, 2006. Portfolio companies, http://www.khazanah.com.my,
(accessed 4th September 2006).
Krugman, P., 1998. Saving Asia: it’s time to get radical, Fortune 138 (5), 7th
September, 74-80.
Rajan, R., Zingales, L., 1998. Which capitalism? Lessons from the East Asian crisis,
Journal of Applied Corporate Finance 11, 40-48.
Sujata, V.P., 2006. Dr M slams Pak Lah but BN leaders rally behind the PM, The Star
(Malaysia) 8th
June
Tourres, M., 2003. The tragedy that didn’t happen: Malaysia’s crisis management and
capital controls, Institute of Strategic and International Studies, Malaysia.
Transformation Management Office, 2006. GLC transformation program on track,
initiatives now in implementation stage,
http://pcg.gov.my/PDF/TMO_Press%20Release%20for%20PCG10_21Jul06.pdf
(accessed 27th
September 2006).
25
Table 1: Statistics and Ratio Analysis Prob is p-value for t-tests for the difference between means of the two groups. The values of the financial variables and growth rates are measured in 1998.
TA is total assets, RM is Malaysian ringgit, ROA is return on assets, PM is profit margin, CR is current ratio, QR is quick ratio, ATR is asset turnover ratio,
ITR is inventory turnover ratio, TD is total debt and STD is short term debt.
Firm
Type
All Johnson and Mitton Connection Khanazah Government Linked Company
Part I: Average Monthly Percentage Returns
Sample
period
n %ret n Yes n No Prob n Yes n No Prob n Yes n No Prob
Oct 98
Sept 00
453 2.236 52 1.723 401 2.302 0.129 18 2.183 435 2.238 0.913 17 2.389 436 2.230 0.691
Oct 00
21 Jun 02
483 -0.502 52 -0.776 431 -0.469 0.422 21 0.290 462 -0.538 0.048 18 -0.215 465 -0.514 0.516
22 Jun 02
Oct 03
525 0.700 52 0.034 473 0.773 0.083 23 -0.147 502 0.739 0.067 19 0.070 506 0.723 0.114
22 Jun 02
22 Jul 02
525 -2.262 52 -0.384 473 -2.463 0.144 22 -3.696 494 -2.198 0.404 18 -5.365 498 -2.149 0.034
Nov 03
21 Jul 05
568 -1.202 52 -1.617 516 -1.160 0.251 25 -0.394 543 -1.240 0.125 19 -0.068 549 -1.242 0.022
22 Jul 05
Jun 06
609 -0.323 52 0.459 557 -0.396 0.044 25 0.194 584 -0.345 0.404 19 0.484 590 -0.349 0.156
26
Table 1 (continued): Statistics and Ratio Analysis
Firm
Type
All Johnson and Mitton Connection Khazanah Government Linked Company
Part II: Financial Variables at Start of Study Period
Variable n value n Yes n No Prob n Yes n No Prob n Yes n No Prob
(A) Size and Growth
TA
RM1000
337 2920 50 4659 287 2617 0.000 16 9984 321 2568 0.000 15 18695 322 2185 0.000
TA
growth %
329 4.55 49 0.43 280 5.27 0.000 16 10.04 280 4.27 0.000 14 3.95 315 4.57 0.730
(B) Profitability
ROA % 318 -1.02 46 -4.64 272 -0.40 0.000 16 -5.76 302 0.63 0.000 15 -0.16 303 -1.06 0.001
PM % 318 4.00 46 -6.81 272 5.83 0.000 16 6.63 302 5.15 0.209 15 6.67 303 3.87 0.000
(C) Liquidity
CR 248 1.65 35 1.14 213 1.74 0.000 14 0.84 234 1.70 0.000 10 1.10 238 1.68 0.000
QR 248 1.21 35 0.85 213 1.27 0.000 14 0.68 234 1.24 0.000 10 0.79 238 1.23 0.000
(D) Asset Utilisation
ATR % 336 42.5 50 42.6 286 42.5 0.931 16 36.9 320 42.8 0.005 15 33.3 321 42.9 0.000
ITR 292 15.2 41 19.4 251 14.5 0.000 14 21.1 278 14.9 0.088 13 5.3 279 15.6 0.000
(E) Leverage
TD/TA 337 28.2 50 46.1 287 25.0 0.000 16 41.5 321 27.5 0.000 15 29.2 322 28.1 0.374
STD/TD 294 62.1 44 58.6 250 62.7 0.000 16 53.1 278 62.6 0.000 15 54.1 279 62.5 0.000
Increase
in TD/TA
329 3.8 49 10.3 280 2.7 0.000 16 8.6 313 3.6 0.000 14 3.4 315 3.9 0.359
Increase
STD/TD
282 1.7 42 5.9 240 1.0 0.000 16 -1.7 266 2.0 0.009 14 1.6 268 1.8 0.886
(F) Book to Market Ratio
336 0.743 48 0.923 288 0.713 0.348 16 0.721 320 0.744 0.869 15 0.688 321 0.745 0.687
27
Table 2: Political connectedness and firm characteristics for restructuring period. The restructuring period starts in October 1998, shortly after the introduction of capital controls, and ends in September 2000. Profitability is measured by
return on assets, debt ratio by total debt divided by total assets, firm size by the natural log of total assets and firm growth by percentage increase in total
assets. Figures for firm size, growth and profitability are measured in the previous year. As figures for current ratios are only available for four finance firms
and inventory figures for five, regressions were not possible for the liquidity and efficiency regressions for financial firms separately. Industry dummy
variables were also estimated but the results are not reported. Figures in parentheses are White heteroskedasticity adjusted t-statistics. The symbol* indicates
significance at 10%,**
at 5% and ***
at 1%
Panel A: Profitability Panel B: Leverage Panel C: Liquidity Panel D: Efficiency
Dependent variable is return on
assets
Dependent variable is debt
ratio
Dependent variable
is current ratio
Dependent variable is
inventory turnover ratio
Firm type Non-
finance
Finance All Non-
finance
Finance All Non-
finance
All Non-
finance
All
-3.426 -1.168 -2.883 22.82 11.87 20.70 -0.317 -0.283 0.670 1.177 J&M
connection (-0.438) (-0.143) (-0.412) (1.311) (0.791) (1.318) (-1.595) (-1.438) (0.033) (0.062)
GLC 6.182 -5.518 3.523 -3.668 7.875 -1.112 0.194 0.190 -25.79 -25.80
(0.636) (-1.159) (0.450) (-0.557) (0.398) (-0.160) (0.510) (0.498) (-1.582) (-1.589)
Khazanah -15.83* -5.454 -14.80
* 11.10
* 4.415 10.04
* -0.430
** -0.442
** 19.27 19.02
(-1.746) (1.473) (1.767) (1.788) (0.399) (1.743) (-2.035) (-2.102) (0.899) (0.885)
Firm size -5.967***
-3.371***
-5.553***
0.376 6.540*
0.849 -0.261 -0.258 0.142 0.175
(-2.598) (-2.417) (-2.794) (0.138) (1.825) (0.346) (-1.518) (-1.502) (0.026) (0.032)
Firm growth -0.081 -0.034 -0.079 -0.117 -0.584**
-0.155* -0.001 0.001 -0.289 -0.282
(-1.215) (-0.207) (-1.262) (-1.425) (-2.072) (-1.800) (0.216) (0.316) (0.830) (-0.829)
Profitability -5.614*
61.26 -4.236 -0.491**
-0.459**
19.15 19.01
(-1.737) (1.598) (-1.495) (-2.093) (-2.018) (0.891) (0.886)
Number of
Observations
291 35 326 291 35 326 237 241 269 274
R-squared 0.230 0.170 0.260 0.074 0.349 0.074 0.105 0.108 0.042 0.043
28
Table 3: Restructuring period returns and political connections The restructuring period starts in October 1998, shortly after the introduction of capital
controls, and ends in September 2000. The dependent variable is average monthly percentage
returns over the period. Firm size is measured by the natural log of total assets and debt ratio
by total debt divided by total assets. J&M means the firm has a crony connection noted in
Johnson and Mitton’s (2003) paper, GLC for a government linked company and Khazanah a
firm with a degree of government ownership. There were insufficient GLC and Khazanah
firms to use dummy variables for these in the specific financial firms regressions. Industry
dummy variables were also estimated but the results are not reported. Figures in parentheses
are White heteroskedasticity adjusted t-statistics. The symbol* indicates significance at 10%,
**
at 5% and ***
at 1%
Panel A: All Connections Panel B: Specific Connections
Non-
finance
firms
Finance
firms
All firms Non-
finance
firms
Finance
firms
All firms
Intercept 6.044***
-1.092 5.159***
6.267***
-1.795 5.276***
(4.655) (-0.407) (4.236) (4.777) (-0.661) (4.291)
Connection 0.069 0.443 0.165
(0.222) (0.623) (0.570)
J&M -0.001 -0.066 0.004
(-0.004) (-0.086) (0.013)
GLC 0.586 0.321
(1.189) (0.650)
Khazanah -0.030 0.309
(-0.054) (0.481)
Firm size -0.175**
0.275 -0.108 -0.193**
0.332* -0.119
(-2.084) (1.450) (-1.392) (-2.234) (1.725) (-1.496)
Debt ratio -1.744***
-3.383***
-1.849***
-1.731***
-3.340***
-1.831***
(-10.923) (-4.925) (-9.738) (-10.719) (-4.980) (-9.497)
Number of
Observations
296 40 336 296 40 336
R-squared 0.157 0.217 0.152 0.159 0.208 0.154
29
Table 4: Consolidation period returns and political connections The consolidation period starts in October 2000, shortly after the introduction of capital
controls, and ends on 21st June 2002, the Day before Mahathir announced his resignation. The
dependent variable is average monthly percentage returns over the period. Firm size is
measured by the natural log of total assets and debt ratio by total debt divided by total assets.
J&M means the firm has a crony connection noted in Johnson and Mitton’s (2003) paper,
GLC for a government linked company and Khazanah a firm with a degree of government
ownership. There were insufficient GLC and Khazanah firms to use dummy variables for
these in the specific financial firms regressions. Industry dummy variables were also
estimated but the results are not reported. Figures in parentheses are White heteroskedasticity
adjusted t-statistics. The symbol* indicates significance at 10%,
** at 5% and
*** at 1%
Panel A: All Connections Panel B: Specific Connections
Non-
finance
firms
Finance
firms
All firms Non-
finance
firms
Finance
firms
All firms
Intercept -4.674***
-6.761***
-4.526***
-4.657***
-3.180***
-4.609***
(-3.805) (-2.723) (-4.042) (-3.740) (-1.380) (-4.092)
Connection -0.065 -1.538**
-0.234
(-0.207) (-2.174) (-0.787)
J&M -0.355 0.406 -0.321
(-0.974) (0.427) (-0.934)
GLC -0.697 -1.064**
(-1.406) (-2.413)
Khazanah 0.902**
0.825*
(1.995) (1.803)
Firm size 0.440***
0.472***
0.425***
0.438***
0.208 0.468***
(4.576) (2.868) (4.878) (4.476) (1.377) (4.898)
Debt ratio -3.500***
-0.355 -3.159***
-3.539***
-0.583 -3.254***
(-4.971) (-0.331) (-4.843) (-5.061) (-0.514) (-5.005)
Number of
Observations
397 40 437 397 40 437
R-squared 0.184 0.165 0.172 0.194 0.067 0.184
30
Table 5: Transition period returns and political connections The transition period starts 22
nd June 2002, the day Mahathir’s resignation was received by the market, and ends in October 2003, when Badawi became
Prime Minister. The dependent variable is average monthly percentage returns over the period. Firm size is measured by the natural log of total assets and
debt ratio by total debt divided by total assets. J&M means the firm has a crony connection noted in Johnson and Mitton’s (2003) paper, GLC for a
government linked company and Khazanah a firm with a degree of government ownership. There were insufficient GLC and Khazanah firms to use dummy
variables for these in the specific financial firms regressions. Industry dummy variables were also estimated but the results are not reported. Figures in
parentheses are White heteroskedasticity adjusted t-statistics. The symbol* indicates significance at 10%,
** at 5% and
*** at 1%
Panel A: All Connections Panel B: Specific Connections Panel C: Anwar and non-Anwar
Non-finance
firms
Finance
firms
All firms Non-finance
firms
Finance
firms
All firms Non-finance
firms
Finance
firms
All firms
Intercept -0.785 2.241 -0.294 -0.952 1.663 -0.343 -0.950 2.325 -0.323
(-0.567) (0.998) (-0.238) (-0.673) (0.790) (-0.274) (-0.673) (1.047) (-0.259)
Connection -0.521 0.234 -0.445
(-1.532) (0.298) (-1.395)
J&M -0.325 -0.646 -0.374
(-0.789) (-0.657) (-0.966)
GLC -0.819**
-0.431 -0.827**
-0.441
(-2.110) (-1.053) (-2.086) (-1.068)
Khazanah -0.343 -0.351 -0.331 -0.329
(-0.680) (-0.749) (-0.653) (-0.698)
Non-Anwar -0.370 -1.228 -0.461
(-0.729) (-0.940) (-0.948)
Anwar -0.225 0.672 -0.183
(-0.342) (1.344) (-0.319)
Firm size 0.154 -0.109 0.115 0.168 -0.060 0.120 0.168 -0.109 0.118
(1.439) (-0.699) (1.223) (1.546) (-0.440) (1.261) (1.548) (-0.748) (1.247)
31
Debt ratio -1.141 -1.383 -1.148 -1.165 -1.369 -1.145 -1.159 -1.023 -1.133
(-1.580) (-0.842) (-1.621) (-1.593) (-0.817) (-1.599) (-1.601) (-0.582) (-1.599)
Number of
Observations
467 41 508 467 41 508
467
41
508
R-squared 0.057 0.046 0.055 0.058 0.066 0.056 0.058 0.116 0.056
32
Table 5a: Transition period returns and political connections - First Month Returns Only
Panel A: All Connections Panel B: Specific Connections Panel C: Anwar and non-Anwar
Non-finance
firms
Finance
firms
All firms Non-finance
firms
Finance
firms
All firms Non-finance
firms
Finance
firms
All firms
Intercept -7.374**
-10.419 -7.916**
-9.222**
-11.367 -10.633***
-9.232**
-7.196 -10.553***
(-2.061) (-0.899) (-2.285) (-2.461) (-0.991) (-2.946) (-2.455) (-0.590) (-2.932)
Connection 0.236 2.898 0.588
(0.189) (0.752) (0.492)
J&M 1.262 9.851**
2.287
(0.810) (2.541) (1.562)
GLC -1.023 -4.072* -0.983 -4.112
*
(-0.474) (-1.952) (-0.467) (-1.960)
Khazanah -2.620 -1.371 -2.670 -1.287
(-1.225) (-0.658) (-1.255) (-0.616)
Non-Anwar 1.447 6.786 1.971
(0.676) (1.519) (1.015)
Anwar 0.861 17.794***
2.987*
(0.600) (3.419) (1.697)
Firm size 0.395 0.539 0.437 0.552* 0.562 0.653
** 0.554
* 0.250 0.654
**
(1.392) (0.675) (1.609) (1.842) (0.727) (2.327) (1.840) (0.320) (2.306)
Debt ratio 0.828 -0.462 0.722 0.642 -1.633 0.372 0.621 0.985 0.418
(0.852) (-0.060) (0.735) (0.647) (-0.260) (0.377) (0.603) (0.147) (0.411)
Number of
Observations
455 42 497 455 42 497
455
42
497
R-squared 0.010 0.053 0.013 0.016 0.210 0.029 0.016 0.258 0.029
33
Table 6: Resolution period returns and political connections The resolution period starts in November 2003, immediately after Badawi took power, and
ends on 21st July 2005, the day the currency peg was removed. The dependent variable is
average monthly percentage returns over the period. Firm size is measured by the natural log
of total assets and debt ratio by total debt divided by total assets. J&M means the firm has a
crony connection noted in Johnson and Mitton’s (2003) paper, GLC for a government linked
company and Khazanah a firm with a degree of government ownership. There were
insufficient GLC and Khazanah firms to use dummy variables for these in the specific
financial firms regressions. Industry dummy variables were also estimated but the results are
not reported. Figures in parentheses are White heteroskedasticity adjusted t-statistics. The
symbol* indicates significance at 10%,
** at 5% and
*** at 1%
Panel A: All Connections Panel B: Specific Connections
Non-
finance
firms
Finance
firms
All firms Non-
finance
firms
Finance
firms
All firms
Intercept -6.238***
-8.170***
-6.803***
-6.007***
-7.113***
-6.447***
(-4.474) (-3.137) (-5.351) (-4.246) (-3.550) (-5.070)
Connection 0.132 -1.269 -0.071
(0.364) (-1.465) (-0.212)
J&M -0.316 -2.129**
-0.563
(-0.738) (-2.185) -1.436
GLC 0.464 0.455
(0.785) (0.967)
Khazanah 0.453 0.462
(0.760) (0.843)
Firm size 0.252***
0.561***
0.278***
0.233**
0.490***
0.268***
(2.670) (3.387) (3.514) (2.385) (3.993) (3.117)
Debt ratio -0.576* -4.815
** -0.590
* -0.561
* -4.843
*** -0.574
*
(-1.760) (-2.514) (-1.689) (-1.788) (-2.770) (-1.727)
Number of
Observations
512 41 553 512 41 553
R-squared 0.103 0.370 0.107 0.106 0.450 0.113
34
Table 7: Final period returns and political connections The final period starts on 22
nd July 2005, the day after the currency peg was removed, and
ends in June 2006. The dependent variable is average monthly percentage returns over the
period. Firm size is measured by the natural log of total assets and debt ratio by total debt
divided by total assets. J&M means the firm has a crony connection noted in Johnson and
Mitton’s (2003) paper, GLC for a government linked company and Khazanah a firm with a
degree of government ownership. There were insufficient GLC and Khazanah firms to use
dummy variables for these in the specific financial firms regressions. Industry dummy
variables were also estimated but the results are not reported. Figures in parentheses are
White heteroskedasticity adjusted t-statistics. The symbol* indicates significance at 10%,
** at
5% and ***
at 1%
Panel A: All Connections Panel B: Specific Connections
Non-
finance
firms
Finance
firms
All firms Non-
finance
firms
Finance
firms
All firms
Intercept -7.427***
1.215 -6.001***
-7.799***
1.052 -6.331***
(-4.896) (0.434) (-4.434) (-5.040) (0.383) (-4.532)
Connection 0.175 0.296 0.181
(0.462) (0.373) (0.519)
J&M 0.668 0.625 0.674
(1.542) (0.504) (1.654)
GLC -0.600 -0.636
(-0.801) (-1.008)
Khazanah -0.134 -0.017
(-0.192) (-0.026)
Firm size 0.628***
-0.053 0.516***
0.658***
-0.041 0.542***
(5.273) (-0.286) (4.888) (5.408) (-0.228) (4.977)
Debt ratio -3.413***
1.853 -3.157***
-3.741***
1.581 -3.227***
(-4.433) (0.664) (-4.171) (-4.489) (0.551) (-4.250)
Number of
Observations
556 44 600 556 44 600
R-squared 0.126 0.016 0.117 0.130 0.023 0.121
35
Appendix – Politically Connected Firms
Data on unofficial political crony connections, called “Johnson and Mitton” here, is sourced
from information in table A1 of Johnson and Mitton (2003) based on Gomez and Jumo
(1997).
Government Linked Companies (GLCs) are defined as companies that have a primary
commercial objective and in which the Malaysian Government has a direct controlling stake.
Controlling stake refers to the Government’s ability to appoint board members, senior
management, make major decisions (e.g contract awards, strategy, restructuring and
financing, acquisitions and divestments etc) directly or through government linked investment
companies. Officially listed GLCs serve on an advisory committee and are expected to act
“responsibly” in the country’s interest. The names of these companies were sourced from a
media release from the Transformation Management Office of 21st July 2006
Khazanah firm have some degree of government ownership through the government’s
investment arm Khazanah Nasional Berhad (KNB). Theses firms were identified through the
KNB website.
Company Connection Johnson
& Mitton
Government
linked
company
Khazanah
Advance Synergy Daim, Anwar x
Advance Synergy Capital Daim, Anwar x
Affin Holdings x
AIC x
Amcorpgroup UMNO x
Antah Holdings Mahathir x
Astro All Asia Networks x
Bandar Raya Dev. MCA x
Berjaya Daim x
Berjaya Sports Toto Daim x
BIMB Holdings x
Bintulu Port Holdings x
Boustead Holdings x
BSA International x
Bumiputra-Commerce Hldg. x
Cement Inds.of Malaysia x
Chemical Malaysia x
CSM Daim x
Cycle & Carr. Bintang Daim x
Damansara Realty UMNO x
Drb-Hicom x
E & O Property Dev. Daim x
Ecm Libra Unspecified x
Edaran Otomobil Nasional x
Ekran Daim, Mahathir,
Abdul Taib
Muhmud
x
Faber Group UMNO x x
Gold Bridge Engr.& Con. x
Golden Plus Holdings Anwar x
Guocoland (Malaysia) Anwar x
36
Halifax Capital Anwar x
Ho Hup Construction Daim x x
Hong Leong Bank Anwar x
Hong Leong Finl.Gp. Anwar x
Hong Leong Industries Anwar x
Hume Industries Mal. Anwar x
Idaman Unggul Anwar x
Java Daim x
JT International Daim x
KFC Holdings (Malaysia) Anwar x
Kretam Holdings Daim x
Kumpulan Fima Daim x
Kumpulan Guthrie x
Land & General Daim x
Landmarks Daim x
Magnum Daim x
Malakoff UMNO x
Malayan Banking x
Malaysia Airports Hdg. x x
Malaysia Building Soc. x
Malaysian Airline Sy. Daim x x x
Malaysian Res. Daim, Anwar x x
Media Prima UMNO x
Metroplex Unspecified x
MISC Bhd. x
Multi-Purpose Holdings Daim x
Mycom Ghafar Baba x
Naluri Unspecified x
Nanyang Press Hdg. Anwar x
New Straits Times Press Anwar x
OYL Industries Anwar x
Pan Malaysia Capital Daim x
Park May x
Pharmaniaga x
Plus Expressways x
Pos Mal.&Svs.Hdg. x x
Prime Utilities Daim, Anwar x
Proton Holdings x x
Rashid Hussain Daim x
Sapura Technology Mahathir x
Sime Darby x
Star Publication (Mal.) Daim x
Tebrau Teguh Daim x
Telekom Malaysia x x
Tenaga Nasional x x
TH Plantations x
Time Dotcom x
Time Engineering Daim x x
Tradewinds (Mal.) x
UDA Holdings x
37
UEM Builders x
UEM World Daim x x x
UMW Holdings x
United Plantations Daim x
Utusan Melayu (Malaysia) UMNO x
Wijaya Baru Global Daim, Mahathir,
Abdul Taib
Muhmud
x