The Impact of The Government-Linked Companies Transformation Program (GLCTP) on The Performances of Government-Linked Companies (GLCs) in Malaysia

Abstract

This paper examines the impact of the 10-year long Government-Linked Companies Transformation Program (GLCTP) on the performances of the Government-Linked Companies (GLCs) and non-Government-Linked Companies (non-GLCs) in Malaysia introduced in 2005. The performance of GLCs and matching non-GLCs are compared using difference-in-differences estimation techniques. Financial performance is measured using Returns on Asset (ROA) and Returns on Equity (ROE) while Tobin’s Q ratio is used as a measure of a firm's value. Results show that the GLCTP have a statistically significant negative effect on GLCs’ financial performance. Difference-in-difference estimation also shows that the GLCTP has a negative effect on firms’ market value relative to firms’ assets as measured by Tobin’s Q ratio.