Government-linked Companies Research Articles

Attaining Sustainable Organization in an Era of Technology Disruption through Leadership and Strategic Decision Making: Mediating Role of Organizational Politics

In an environment of constant accelerating change, organizations need to ensure they continually invest in their internal capabilities. Upskilling staff, and ensuring the leadership style is adaptive and responsive to change is key to ensuring sustainability in the organization. This study aims to examine the effect of blue ocean leadership style on strategic decision making, mediates by organizational politic. The questionnaire was adopted from previous study and distributed to middle to top level manager in the Malaysian 20 largest Government Link Companies (GLCs). A stratified random sampling technique is adopted to ensure the sample represent the actual population. PLS-SEM was used to test the hypotheses. The findings of this study show that there is a partial mediating effect of organizational politics on the relationship of blue ocean leadership styles and strategic decision making. Organizational politics has its ambivalence, but it can be exploit by developing its proper understanding and political skill amongst leaders, which can be used for strategic decision making and implementation, to deliver an excellent and effective change.

Factors Influencing the Effective Leadership Succession Planning: Study on A Malaysian GLC

Factors influencing effective Leadership Succession Planning (LSP) of one main Malaysian Government Linked Companies (GLC) becomes the focal scope of this research paper. The need to understand external factors, among others, on Malaysian economic policy itself, has a great influence on LSP program. It is not sufficient for the leaders in GLCs to only master their business operations knowhow. With the great interest to discover the actual practice of a successful GLC, researcher took this subject as this qualitative research is aimed to study the current factors and the gap that is influencing the effectiveness of current LSP initiatives by a service-oriented of GLC, and to highlight some key critical factors as proposed in the literature. Factors influencing the effectiveness of LSP are also subject on the ability of the leaders to adopt to external changes particularly in the era of a borderless economic and faster rate of technology changes, and there are some differences among the industries and organizations, subject to the nature of the business and their stakeholders. Nevertheless, some important concept in LSP can be used as guidelines and practices be it from the primary data or the research literature. In view of this, the researcher is determined to conduct a qualitative study in meeting the research objectives and to answer the research questions. An interview with the Group Chief Executive Officer (CEO) of one GLC, who is the subject matter expert. The recording from the interview was transcribed and further analyzed using ATLAS.ti software. The findings evidence that there is the current practice of leadership succession planning in the company, anyhow there is a gap between the aspirations of the Group CEO and the availability of C-level replacement from within, and between the reality and the theories. Results of the findings identify the outcomes that need to be taken into action for a more effective LSP program. In the future, similar research approach can be conducted to other GLCs in order to analyze the similarities and complementary aspirations with regards to LSP.

Does Commitment to Anti-Corruption Matter?

The Malaysian capital market regulators take great efforts to continuously enhance corporate governance codes and practices to improve transparent reporting and enhance board responsibility and investors’ protection. In 2017, the Malaysian Institute of Corporate Governance published a report assessing the transparency of reporting by top 100 listed companies in respect of anti-corruption, organizational disclosure, and sustainability. This study uses this unique set of data on scores on anti-corruption commitment, organizational transparency, and sustainability to investigate the association between corporate transparency and firm value, and whether political connections moderate this relationship. Not surprisingly, findings show that listed government-linked companies (GLCs) have higher scores than non-GLCs, such as family and foreign firms. Firms with enhanced anti-corruption commitment are more likely to have higher firm value, and this relationship is stronger for politically connected firms. The implications for investors and regulators are discussed in this paper.

The Influence of Competency, Usage of It and Career Expectation on Internal Auditor’s Effectiveness in Ggovernment Linked Companies (GLCs)

National Audit Department (NAD) had repetitively recommended Federal Ministries/ Departments and Government-Linked Companies (GLCs) through its Auditor-General’s Report on the need to have an effective internal audit function to identify and mitigate weaknesses in their activities. Therefore, the purpose of this study is to examine factors that influence the effectiveness of the internal auditors especially for those that work in GLCs in Malaysia. It is to determine the internal auditors’ perception toward the effectiveness of internal audit activities, influenced by the individual factors related to the internal auditors themselves. This study also aims to determine the relationship between factors that contribute to the effectiveness. 300 questionnaires were distributed to internal auditors that work in GLCs in Malaysia using convenience sampling method, of which, 124 internal auditors had responded. Several statistical techniques such as the descriptive statistic, correlation and regression analysis were used to analyse the data from the survey. The result of the study showed that there were significant relationships among the factors analysed in this study which are the internal auditors’ competency, usage of information technology (IT) and career expectation. Hence, the effectiveness of internal audit will depend strongly to the attributes of the factors analysed in this study. This study will help organisations especially GLCs in understanding the factors that influence the internal auditors’ effectiveness and taking necessary action to improve their internal audit function. Consequently, the internal audit function could perform better in reporting findings and giving significant recommendations that give impact to the organisations.

Government-Linked Investment Companies and Real Earnings Management: Malaysian Evidence

This study examines the association between government-linked investment companies’ (GLICs’) shareholdings and real earnings management activities in Malaysia. Consistent with prior research, this study uses three proxies to measure real earnings management; abnormal cash flow from operations (RCFO), abnormal production costs (RPC), and abnormal discretionary expenses (RDE). This study segregates GLICs’ shareholdings into two categories; Federal Government Pension Investment Funds (FGPIF) and other GLICs (OFGLIC). Using a sample of 213 firm-year observations of Malaysian government-linked companies from 2010 to 2015, this study finds that FGPIF is a more effective monitoring mechanism than OFGLIC in limiting real earnings management. The findings also show that there is a significant and negative relationship between Employee Provident Fund (EPF), Khazanah Nasional Berhad (Khazanah), Permodalan Nasional Berhad (PNB) and RCFO and RPC. The evidence suggests that these three are the most effective government institutional investors in promoting corporate governance, which in turn limit real earning management activities in Malaysia. In general, the findings support the incentive alignment hypothesis, which argues that companies with government intervention are normally better governed.

Corporate Social Responsibility by Malaysian and Singapore Sustainable Index Companies

The main objective of this study is to investigate Corporate Social Responsibility (CSR) practices by listed companies in Malaysia and Singapore. These companies have been classified as sustainability index companies by the stock exchanges in those countries. Sustainability is a sister concept of CSR. The results of the study show the influence of the stock exchanges and government in business CSR initiatives. The second objective of this study is to suggest three variables, namely Government Link Companies, Reporting Website and Assurance Report, to mirror the recent changes in CSR practices. The results also show the significant influence of these three variables in explaining the current business CSR practice in two countries. Finally, the study also suggests that future research should employ third party CSR data, for the accuracy and reliability of the result.

Board Characteristics and Firm Performance: Malaysia’s Government-Linked Companies (GLCS) Compliance to Green Book

The Government-Linked Companies Transformation (GLCT) Programme was introduced in 2005 as the Malaysia Government efforts to improve the performance of government-linked companies (GLCs) under its control. One of the main policy thrusts in this framework is the need to upgrade the effectiveness of GLCs boards which led to the launching of the Green Book on April 2006. Focusing on the Green Book structuring high-performing board guidelines, this study tries to examine whether compliance to its recommended board characteristics of size, independence and remuneration has any effect on GLCs performance. Thus, GLCs financial performance for three years before (2004, 2005 and 2006) and three years after (2007, 2008 and 2009) the guidelines became mandatory effective on 1 January 2007 are analyzed and compared. The results show that the Green Book is a successful tool to increase board effectiveness in its monitoring function. However, compliance to board characteristics of size, independence and remuneration do not affect GLCs performance. Thus, it can be concluded that the influence of the Green Book as corporate governance factor is insufficient to explain the variations in GLCs performance.

Gaining competitive advantage through new product development capability in Malaysian Government Linked Companies

A new product development capability can be shown through organisational routines that shape the processes of innovation, which are aimed to reconfigure a firm’s product portfolio. It is aimed to create a concrete physical asset from an idea and this relates to the innovation that is the mechanism by which firms to produce new products, processes and systems that essential in order to adapt market changes, technologies and types of competition. New product development capability aids corporate managers plan and execute strategies successfully while securing sustainable competitive advantages. This paper aims to explore the extent of top management emphasis on the measures of new product development that are deemed important for business survival and sustainability in the context of Malaysian government-linked companies (GLCs). A questionnaire survey was distributed with a response rate of 47%. Findings revealed that design a high quality of product or service is the most important measures. This revealed that it is a common exercise for Malaysian GLCs to put high emphasis on the importance of the quality of the new products or services.

Gaining competitive advantage through new product development capability in Malaysian Government Linked Companies

A new product development capability can be shown through organisational routines that shape the processes of innovation, which are aimed to reconfigure a firm’s product portfolio. It is aimed to create a concrete physical asset from an idea and this relates to the innovation that is the mechanism by which firms to produce new products, processes and systems that essential in order to adapt market changes, technologies and types of competition. New product development capability aids corporate managers plan and execute strategies successfully while securing sustainable competitive advantages. This paper aims to explore the extent of top management emphasis on the measures of new product development that are deemed important for business survival and sustainability in the context of Malaysian government-linked companies (GLCs). A questionnaire survey was distributed with a response rate of 47%. Findings revealed that design a high quality of product or service is the most important measures. This revealed that it is a common exercise for Malaysian GLCs to put high emphasis on the importance of the quality of the new products or services.

Internal auditor’s compliance to code of ethics

PurposeThe purpose of this study was to determine the professional competency levels acquired by internal auditors in detecting unethical behaviour, to evaluate the position of internal auditors on objectivity and integrity in dealing with unethical behaviour and to examine the extent of their awareness on ethical issues in government-linked companies (GLCs).Design/methodology/approachData were collected via questionnaires that were randomly distributed to the internal auditors of the selected GLS in Malaysia. These questionnaires were constructed from the Certified Internal Auditor (CIA) Examination Paper and The Institute of Internal Auditors (IIA) Competency Framework.FindingsThis study found that internal auditors of the GLCs had a high level of competency in performing audit engagements and were able to detect unethical practices in the companies. The majority of the internal auditors also had a high level of objectivity and integrity when faced with unethical behaviour during audit engagements.Research limitations/implicationsThis study provided strong evidence that the internal auditors of Malaysian GLCs strongly complied with IIA Code of Ethics. Besides, they were also aware of the unethical behaviour which occurred within their organizations. However, this study is limited to the internal auditors in GLCs, while the questions of the survey instrument are restricted to the elements of integrity, objectivity and professional competencies of internal auditors.Practical implicationsThis study highlights the level of internal-auditor competency and adherence to the IIA’s International Standards for the Professional Practice of Internal Auditing (ISPPIA) and IIA’s Practice Guide to identify unethical behaviour within the Malaysian GLCs.Originality/valueThis study is original as it focusses on GLCs which did not get much attention from previous researchers, particularly the GLCs that operate in a developing country such as Malaysia.

The Effects of Liquidity, Profitability and Board Characteristics on Debt Restructuring Likelihood Among Malaysian GLCs

This study investigates the cross-sectional variation in debt restructuring among Malaysian publicly listed Government Linked companies (GLCs) and non-GLCs (NGLCs) for the period of from 2005 to 2015. It attempts to test several firm determinants that can influence the likelihood of Malaysian GLCs to exercise debt restructuring. Past studies argue that liquidity and profitability influences firm’s choice to exercise debt restructuring. This study proposes variants of board of characteristics as one of the influential factors in GLCs debt restructuring since board of directors for this type of organization are usually controlled or owned by government. We employ imbalanced panel data with logistic regression as the method of analysis. The findings show that liquidity, profitability and board characteristics have significant relationship with debt restructuring. The results for profitability indicates that firm with low profitability has higher chance for debt restructuring exercise. However, liquidity has recorded an opposite relationship in our sample. This may be due to our liquidity measures the focuses on short term assets which is less appropriate in debt restructuring context. With regards to board characteristics, three variables such as board size, fraction of Malay directors and fraction of directors with Master degrees show negative and significant relationship influence on the debt restructuring.

Embracing the Need of Employee Creativity and Innovation: A Study of Selected Government Linked Companies (GLCs)

The ability of employees to become creative and innovate is significant in gaining competitive advantages. Many studies have highlighted the significant and the need for employee creativity and innovation for organisational survival. In Malaysia, the need for creativity and innovation has been highlighted in the national Vision 2020 and “Transformasi Nasional (National Transformation) 50”. The human capitals are expected to be creative and innovative as part of a continual process of becoming a developed nation. As the demands of employee creativity and innovation remain high, this study is intended to examine the level of employee creativity and innovation. This study had involved 142 respondents from the selected GLCs in Kuala Terengganu by using quantitative approach. The measure of central tendency was used to determine the level. This study revealed that the level of employee creativity and innovation is high. This indicated that a lot of efforts have been invested to achieve employee creativity and innovation. This has added new knowledge of creativity and innovation in Malaysia. Every organisation should focus to develop employee creativity and innovation.

Do types of political connection affect firm performance differently?

This study investigates how four types of politically connected firms (PCON); namely, government-linked companies, board of directors, businessman, and family members, affect firm performance. Although anecdotal accounts that commonly professed a positive relationship between political connection and firm performance abound, we found that this is not true for every type of political connection. The results of this study showed that only PCON with a more stable connection (government-linked companies and board of directors) exhibit a positive relationship with firm performance and that such a relationship does not exist in PCON with a connection that is perceived as less stable (businessman and family members). The results of this study show the importance of distinguishing between the different types of connection as not all PCON bring value to a firm. In this study, we use an updated dataset comprising 493 PCON and non-PCON from 2002 to 2016. The evidence is from Malaysia, a country characterized by relationship-capitalism.

Blue Ocean Leadership and Emotional Intelligence in Government Link Companies (GLCs): Preparing for Industry 4.0

This research is carried out to examine the influences of blue ocean leadership styles on emotional intelligence. A stratified random sampling technique is used to identify the sample for this study. Questionnaire is distributed to 120 middle to top level leaders from the selected government link companies (GLCs) which is listed in the Government Link Transformation Programme (GLTP). A partial least square structural model (PLS-SEM) approach is used to analyses the data for this study. The findings indicate that there is a significant relationship between blue ocean leadership style and emotional intelligence. This study would give practical implications where it could inform leaders that they need to have high emotional intelligence in order to lead the organization. This study also contributes to new knowledge by pointing to the leadership role of accurate attributions, where each attribution can lead to enhancing leader effectiveness.

Corporate social responsibility practice of Malaysian public listed government-linked companies: A dimensional analysis

This paper examines the corporate social responsibility (CSR) practices of the Malaysian public-listed government-linked companies (GLCs) using a dimensional analysis. Four dimensions of CSR activities, namely community, employees, environment and governance, are investigated to study the latest CSR practice of GLCs in year 2016. Each dimension is divided into three subcat-egories to further examine the performance of GLCs on a particular CSR area. This is the first paper in Malaysia which uses CSR ratings (obtained from CSRHub database) to proxy for CSR practice. None of the past literature has been found to adopt this approach. The findings show that Malaysian public-listed GLCs performed better in community, employees and environment dimensions, whilst tend to underperform in governance dimension.

Commitment on corporate social responsibility by the government link companies in Malaysia

Corporate social responsibility (CSR) is a concept whereby organizations consider the interests of the society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other relevant stakeholders. CSR portrays the collaboration and integration between public and private sectors towards ensuring the healthier and better quality of life of society. The concept of CSR is based on the mutual dependence between a corporate and society as well as the indicators that affect these relationships. Society at large is looking at private sectors for answers regarding problems such as health crises, and environmental issues that related to their daily lives. Therefore, this study will explore the types of social responsibility programs provided by public companies in Malaysia. In other words, the paper tries to look at the Government-Linked Companies roles in anchoring Malaysia Government socioeconomic structure by identifying their initiative to provide CSR programmes or activities to the community.

Cost Reduction and Business Strategy Matters to Human Resource Outsourcing? A Validation by HR Experts from Government Link Companies (GLC’s).

The phenomenon of outsourcing has spawned a rich body scholarly reseach in sveral decades. However, the answer to one of the pertinent question has remained elusive: Does cost reduction and business strategy really matters to the human resource outsourcing impacts. Looking at this question it is important for the organization to embark on the practice of human resource outsourcing to save operating cost and remain competitive. Therefore, the objective of this study is to investigate the effects of cost reduction and business starategy towards human resource outsourcing impacts. Both quantitative and qualitative methods were employed and the top management in Malaysian Government Link Companies (GLC’) is the unit of analysis. The findings revelaved that, both variables are significant statistically and non statically i.e from the experts opinion. Finally, the study also provides useful directions for future research, HR Practitioners and policy maker particularly in managing and organizing human reseouce matters.

Sustainability Reporting and Firm Value: Evidence from Singapore-Listed Companies

As sustainability reporting has emerged as one of the most critical issues in the business world, this research aims to investigate the relationship between sustainability reporting and firm value based on listed companies in Singapore. We use an established sustainability reporting assessment framework and test how both the adoption and quality of sustainability reporting are related to a firm’s market value. Empirical results suggest that sustainability reporting is positively related to firm’s market value and this relationship is independent of sector or firm status such as government-linked companies and family businesses.

Islamic Leadership Behaviour Practices among Muslim Women Managers

Researches have highlighted significant cultural and religious contextual differences in leadership studies. This research aims to investigate variance of Islamic leadership behaviour orientation among women managers in Malaysia government-linked companies or GLCs. This research is a survey research and was conducted between 2013 and 2015. A set of self-administered Islamic Leadership Inventory (ILI) questionnaire with 25 dimensions and 75 items were distributed to 208 Muslim women managers who hold leadership roles around Malaysia GLCs. The managerial backgrounds such as age, tenure and leadership positions were also investigated. The results of analysis of variance (ANOVA) revealed that Islamic leadership behaviour is understood and practiced widely by women officers across ages, years of working, and leadership positions. Future research could investigate ILI with leadership performance variables to increase the validity of the inventory.

Does job satisfaction, fair treatment, and cooperativeness influence the whistleblowing practice in Malaysian Government linked companies?

PurposeWhistleblowing is an important factor in preventing corruption and fraud in organizations. There is a law to promote whistleblowing practices, but the negative subsequent effect of whistleblowing demotivates the reporting of unethical behaviors. Thus, it is important to identify the factors that motivate an employee to exercise whistleblowing in an organization. Therefore, the purpose of this paper is to examine whether the personal factor of job satisfaction and organizational factors such as fair treatment as well as cooperativeness contribute to the whistleblowing practice in an organization.Design/methodology/approachThis study collected primary data based on a questionnaire survey from 73 respondents of the seven top most government linked companies (GLCs) in Malaysia. The data are analyzed using descriptive statistics, factor analysis, and cross-sectional regression.FindingsThe findings of the study reveal that only fair treatment is statistically significant and positively related to the whistleblowing practice. The findings imply that if employees perceive that the organization provides fair treatment in terms of career advancement, awards, training, performance appraisal, job assignment, and pay increases, they would tend to report wrongdoing activities to protect the image of the organization.Practical implicationsThe findings of the study will help the policy makers to ensure better working environment and accountability in the public sector of Malaysia and other similar countries.Originality/valueThis is an original study based on primary data to examine the current practices of whistleblowing and its relationship with the practices of job satisfaction, fair treatment, and cooperativeness in the GLCs of Malaysia.