Public Listed Companies In Malaysia Research Articles

Effects of ESG on Firm Performance and Firm Value: A Study of Indonesian and Malaysian Listed Companies

The effect of ESG on firm value and financial performance of a company is a well-researched and controversial topic in academic research, as many authors conclude different results in their studies. Previous studies suggest that ESG has a positive effect on firm value or financial performance, while some studies suggest the opposite, while some studies also suggest that only specific factors within ESG such as environmental, social, and governance factors significantly affect firm value and financial performance of a company. To contribute to current literature in the field and to resolve the dispute in controversial results, this study aims to assess the significance of ESG on firm value and financial performance of Indonesian and/or Malaysian public-listed companies, to deduce whether ESG has positive or negative effect of firm value and financial performance, and to determine which individual factors of ESG has the most affect to the overall ESG score of each Indonesian and/or Malaysian public-listed companies. As there has been limited research on the topic in Indonesia and Malaysia, the author uses PLS-SEM to analyze the effects of ESG scores on firm value and financial performance of 10 Indonesian public-listed companies and 15 Malaysian public-listed companies using available financial and ESG scoring data from YahooFinance during the 3rd quarter of the 2022 year. The study done using PLS-SEM suggests that ESG has a significant positive effect on financial performance (proxied using ROA or Return of Assets) while ESG has no significant but positive effect on firm value (proxied using Tobin’s Q value). In addition, factor analysis of the PLS-SEM model shows that from three pillars of ESG, only social and governance scores have a correlation with the overall ESG score.

Effective tax rate, board diversity, and firm performance: Evidence from the electric and electronic industry

This study examines the effect of effective tax rate (ETR) and board diversity on the performance of Malaysian public-listed companies (PLCs) in the electric and electronic (E&E) industry. The sample of this study comprised 51 E&E public companies listed in the Main Market of Bursa Malaysia during the financial periods 2018 and 2022. This study documents a significant positive relationship between firm performance and ETR, consistent with the political cost theory, suggesting that high-performing industries such as E&E are more at risk of political scrutiny and, hence, tend to pay higher amounts of tax despite the tax incentives provided by the government. Interestingly, foreign directors are negatively related to a firm’s performance. The possible explanation for this is that the E&E industry is highly regulated by the Malaysian government; hence, foreign directors’ contribution and authority to make independent strategic changes to drive the firm’s performance are limited. Finally, the effect of female directors on firm performance is found to be insignificant, possibly because, on average, only 10% of women are represented on the board of the E&E PLCs. The study findings are of significant interest and beneficial to policymakers, the government, and tax authorities in trying to understand the implications, assess the effectiveness, and tightly monitor the tax incentives and board diversity policy of the E&E companies.

World-class good governance ethics: a key solution to tackle criminal acts in Malaysian public-listed companies

Purpose The purpose of this study is to propose a world-class good governance ethics framework that leads to better corporate performance. ethics among managers, executives and members of the board of directors working in public-listed companies brings grave concern because of the increasing number of criminal acts reported by the Security Commission of Malaysia. Design/methodology/approach This study introduces a world-class good governance ethics framework for curbing criminal acts in public-listed companies in Malaysia. This study used a mixed method to gather data, and the methods used are appropriate for answering the research questions based on the World-Class Good Governance Ethics framework. Findings The finding of this study reveals high expectations for a corporate organization to improve individual and team performance while undertaking their corporate responsibilities, and a matter of choice, to adopt world-class good governance ethics in their policies and practices. Practical implications This study could be a reference for corporate management to regulate policies monitoring management's and employees' conduct at the workplace. This study's theoretical and practical significance would guide the stakeholders in corporate management to regulate governance policies based on the right ethical values and promote personalities with high integrity in management conduct. Originality/value This study promotes a world-class good governance ethics framework in curbing criminal acts for better corporate performance. This new framework is formulated based on the concept of a caliph and other essential elements envisaged by the Quranic verses.

Revised guidelines for sustainability reporting: readability and assurance

PurposeIn 2015, Bursa Malaysia Berhad (BMB) issued the first edition of the Sustainability Reporting Guide (SRG 1.0) to aid Malaysian public listed companies (PLCs) in preparing corporate social responsibility reporting (CSRR). After receiving users' commentaries, BMB issued the second edition of SRG (SRG 2.0) in 2018. Given the major amendments in CSRR regulatory guidelines, there is a need to analyze the readability of CSRR in light of the new guide and to investigate the combined effects of SRG 2.0 and the assurance of CSR information on the readability of CSRR.Design/methodology/approachThis study employs two readability indices to compare the readability of CSRR ex-ante and ex-post the implementation of SRG 2.0 across a sample of Malaysian PLCs that maintained their market capitalization among the top 100 companies.FindingsThe practical findings of the multivariate regression revealed that the readability of CSRR is reduced after the introduction of SRG 2.0. Meanwhile, the readability of CSRR is positively influenced by combining the effect of SRG 2.0 and CSRR assurance.Practical implicationsThis study provides empirical evidence that the amendment to CSRR has made CSR reports more challenging to read and thus reduces their communicative value. Therefore, in their quest to mandate more CSRR information from companies, regulators might need to consider advocating that such data is reported in a readable manner. This study also shows the influential role of CSR information assurance in enhancing the readability of CSRR.Originality/valueThis study helps assess the readability of CSRR among Malaysian companies after the adoption of SRG 2.0. It also contributes to the literature on CSRR, as the readability of such reporting within the context of Malaysia has not been widely examined in previous studies.

The effects of amended sustainability reporting requirements on corporate social responsibility reporting and firm value: the moderating role of assurance

Purpose To assist Malaysian public-listed companies (PLCs) in preparing corporate social responsibility (CSR) reports, Bursa Malaysia Berhad (BMB) launched the second edition of the Sustainability Reporting Guide (SRG) in 2018. This new SRG edition has several additional requirements for CSR reporting (CSRR), the most important of which is a chapter on assurance which provides detailed guidance on how it may be carried out. This study aims to determine whether the new SRG edition influences the extent of CSRR, and whether such effect is moderated by the provision of assurance on CSRR. It also aims to identify whether amending CSRR regulations and providing assurance on such reporting indirectly influences firm value through the possible improvement in the extent of CSRR. Design/methodology/approach This study performed a content analysis of the CSRR of a sample of Malaysian PLCs that maintained their positions among the top 100 companies by market capitalization between 2017 and 2020 to determine the extent of CSRR for the two years before and two years after the implementation of the new edition of SRG. This study conducted different statistical analyses to indicate whether the implementation of the second edition of SRG has an effect on enhancing the extent of CSRR, and whether the provision of assurance on such reporting moderates such an effect. This study then used instrumental variable regressions to examine the influence of the predicted extent of CSRR on firms’ value measured by Tobin’s Q. Findings This study found that the implementation of the second edition of SRG has a positive and significant influence on the extent of CSRR. This effect is strengthened by the provision of assurance on CSRR. Instrumental variable regressions also indicate that enhancing the extent of CSRR affected by the second edition of SRG is linked to higher firm value. Originality/value To the best of the authors’ knowledge, this study is one of the first to assess the determinants and implications of CSRR among Malaysian companies after adopting the second edition of SRG.

Do Environmental, Social and Corporate Governance Practices Enhance Malaysian Public-Listed Companies Performance?

This study examines whether there is a positive relationship between Environmental, Social and Governance (ESG) disclosure and financial performance, as measured by Tobin’s Q. Using a sample of 59 listed firms under the FTSE4Good Bursa Malaysia (F4GBM) Index from 2014 to 2021, our panel regression analyses show: First, ESG has a significant positive impact on company performance. Second, Social Disclosure (SOC) positively impacts financial performance. As a policy suggestion, the government must have a complete mechanism to monitor and promote the ESG blueprint. In addition, the government should develop programmes that are pro-ESG by giving tax exemption to firms that implement ESG strategies, for example, increasing the publicity of the Green Investment Tax Credit (GITA) to promote the development of green technology in Malaysia.

The Role of Corporate Governance on Firm Performance of Public Listed Companies in Malaysia

There has always been an increasing and renewed interest in the business world for corporate governance (CG) to improve Firm Performance (FP) due to global corporate scandals and the continuous downfall of Public Listed Companies (PLCs). The PLC investors look forward to diversifying their investments and maximising their returns as a result of good FP. One of the major investor concerns is the firm's CG, which acts as a tool to minimize their investment risk by monitoring management's decision-making that affects FP. Therefore, this research paper aims to investigate the role of CG on FP of PLCs in Malaysia, particularly on the Audit Committee (AC) and Integrity Committee (IC), which are established to assist the Board of Directors (BOD) in the monitoring of executive management. This study will use the cross-sectional design and organization level as the unit of analysis. Data will be collected from the annual report of 300 PLCs from June ‘2020 to December 2020. The judgmental sampling technique has been adopted in this study. The data will be analysis using Smart PLS. This study can contribute to the literature by filling up gaps in CG literature, especially on IC, which is less researched. This study can enhance the understanding of scholars on CG practices, particularly on BOD's subcommittee. The findings of this study are useful for PLCs, Bursa Malaysia Securities Berhad (Bursa Malaysia), Securities Commission Malaysia (SC) and Malaysian Anti-Corruption Commission (MACC) to understand further the impact of CG on FP, particularly the BOD's subcommittee to enhance and improve on regulatory and legal requirements.

Integrated Business Model – Technology (IBM-T) reporting trends: Pre and Post Malaysian Code of Corporate Governance (MCCG) 2017

Purpose – This research examines the effects of the five primary factors that determine the top 100 Malaysian Public Listed Companies (PLCs) adoption of the Integrated Business Model - Technology (IBM-T), influenced by the presence of the Women on the Board of Directors, Independent Board members, and the Integrated Reporting 8 Content Elements initiatives.Design/methodology/approach – In order to explore the reporting of the IBM-T, the study have used the selective sampling method, means and standard deviation, document analysis, regularity of voluntary disclosure trend analysis, and the Paired-Sample T-Test derived from the MCCG 2012 and the MCCG 2017, as well as past research of the examination of the annual reports and integrated reports.Originality/value – In this paper, new research advancements in the areas of integrated reporting, business models, MCCG 2012, and MCCG 2017 are systematically reviewed. Other PLCs than Malaysian PLCs might use the ranking indices for the Integrated Business Model - Technology, Women Board of Directors, Independent Board of Directors, and the Integrated Reporting 8-Content Elements.

Assessing the implementation of sustainable development goals: does integrated reporting matter?

PurposeThis study aims to investigate the performance of Sustainable Development Goals (SDGs) of public listed companies (PLCs) in Malaysia through their SDGs disclosure. In addition, it examines the impact of integrated reporting (IR) quality on the SDGs’ performance.Design/methodology/approachData are collected from an initial sample of Malaysia’s top 100 market-leading PLCs from 2016 to 2020. Univariate and multivariate analyses were used to test the research hypotheses.FindingsThe results reveal an increasing trend in SDGs’ performance. Companies contributing toward the 17 SDGs grew from 14% in 2016 to 78% in 2020. On a priority basis, the average score of the five years showed that the Malaysian PLCs are paying more attention to SDG 8 Decent Work and Economic Growth (53%); SDG 12 Responsible Consumption and Production (43%); and SDG 13 Climate Action (42%). In addition, the fixed effects regression analysis proves that companies with higher IR quality are more likely to provide better SDGs disclosure.Practical implicationsThis study provides insights to policymakers, investors and management on the vital role of businesses in supporting the SDGs’ achievement and how IR reveals a turning point in achieving the United Nations SDGs’ agenda.Social implicationsThis study provides a clearer understanding of the activities seeking to achieve the SDGs and the influence of IR on them. This opens the debate for future research.Originality/valueTo the best of the authors’ knowledge, this study is a pioneer in examining whether the quality of IR influences SDGs disclosure among large companies in one of the emerging economies in Southeast Asia in its early application stage.

Integrated Business Model – Technology (IBM-T) practices: Bursa Malaysia Sector-Based Trends

Purpose – This study investigates the impact of the five main determinants of strengthening the Integrated Business Model – Technology (IBM-T) practices of the top 100 Malaysian Public Listed Companies (PLCs) through the Integrated Business Model – Technology components, moderated by the presence of the Women Board of Directors, Independent Board of Directors, and the Integrated Reporting 8 Content Elements study across the top 100 Malaysian PLCs.Design/methodology/approach – The methodology employed includes the purposive sampling method followed by descriptive statistics, content analysis, frequency of disclosures trend analysis and the One-Way ANOVA analysis derived from the Malaysian Code of Corporate Governance 2012 (MCCG 2012) and the Malaysian Code of Corporate Governance 2017 (MCCG 2017) together with previous studies of the analysis of the annual reports and integrated reports in order to explore the reporting of the Integrated Business Model - Technology, Women Board of Directors, Independent Board of Directors and the Integrated Reporting 8-Content Elements.Originality/value – This study is a systematic review of recent research developments in the Integrated Reporting, Business Model, MCCG 2012 and MCCG 2017. The Integrated Business Model - Technology, Women Board of Directors, Independent Board of Directors, and the Integrated Reporting 8-Content Elements scoring indices designed which could also be applied to other PLCs other than the Malaysian PLCs.

Audit committee characteristics and financial restatement incidence in the emerging market

This paper discusses issues concerning audit committee characteristics that lead to the occurrence of financial restatements in Malaysian public listed companies (PLCs). The audit committee characteristics were measured using size, independence, frequency of meetings, audit tenure, gender, expertise, age, ethnicity, legal qualifications, and political connections. The data in this study were extracted from the annual reports of 100 firms that had restated their financial statement between 2006 and 2015, and a total of 200 non-restatement firms were matched and observed as control firms. Using univariate and multivariate statistical analysis, the results evince that there is a significant association between audit committee size and frequency of meetings as well as ethnicity and political connections of the audit committee members and the occurrence of financial restatements in Malaysian PLCs. However, the remaining audit committee characteristics show insignificant association with the occurrence of financial restatements. Consistent with Wan Mohammad, Wasiuzzaman, and Nik Salleh (2016), the results show that larger and more rigorous audit committees can strengthen the monitoring role and consequently reduce the occurrence of financial restatements. In addition, the results evince that Malay members in the audit committee have widespread political connections, which negatively affect the decisions by the audit committee, thereby increasing the occurrence of financial restatements.

Analysing the impact of ESG on the performance of Malaysian public-listed companies

Analysing the impact of ESG on the performance of Malaysian public-listed companies

Analysing the impact of ESG on the performance of Malaysian public-listed companies

Analysing the impact of ESG on the performance of Malaysian public-listed companies

TALENT MANAGEMENT DISCLOSURE AS A MEDIATOR BETWEEN CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE

Active participation from the corporate sector in designing and implementing corporate social responsibility (CSR) activities is critical for company resilience and reliance. It has been suggested that companies need to integrate CSR activities with talent management strategies. However, the extant literature on CSR reporting has limited research focusing on talent management in CSR activities. Therefore, this study examines the extent of talent management disclosure (TMD) made by the top 100 Malaysian public-listed companies (PLCs). Particularly, this study examines the mediating effect of TMD on the corporate governance characteristics (CGC) and corporate financial performance (CFP) relationship. Generalised Linear Modelling (GLM) was used to analyse the cross-sectional data. The results indicate that female directors positively influence CFP, whereas independent directors negatively correlate with CFP. This study also finds that TMD has an insignificant moderating role in the CGC and CFP relationship. Nevertheless, the newly developed TMD provides a new perspective on talent management research. TMD is a new research avenue under-researched and needs more academic and business executive attention. Thus, this research invites academia and company management to revisit CSR activities by embedding talent management strategies.

Internal Business Factors for Business Sustainability: A realistic view from sustainability managers

Sustainability has received a great deal of criticism, particularly the development of strategies, operationalisation and implementation of those strategies. The study aimed to understand environmental practices in business operations and identify the internal business factors that influence the success of environmental practices. Semi-structured interviews were used to gather information from Malaysian Public-Listed Companies (PLCs) that significantly contributed to the advancement of sustainable development in the country. This study suggests a comprehensive set of data to investigate comparative analysis based on different industries for better insights. Keywords: Sustainability, environmental, social, internal business factors eISSN: 2398-4287© 2021. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v6i18.3015

Application Of Beneish M-Score Model In Detecting Probable Earnings Manipulation In Malaysian Public Listed Companies

Earnings manipulation involves alteration, adjustment, exploitation, and even timing of transactions in financial statements with the intention to report a sound economic performance in a company. This act could jeopardize the company’s financial performance in the long run and also make its stakeholders to suffer significant losses. Therefore, a tool to detect or predict earnings manipulation would be helpful to the stakeholders, practitioners, regulators, academicians, and professionals in the accounting field. Besides, an early detection tool is needed to alarm the enforcement agencies to make further investigations or legal actions. Therefore, the aim of this study is to analyse the Beneish M-Score models and its eight accounting variables to detect the likelihood to engage in earnings manipulation in the case of Malaysian PLCs (Public Listed Companies). The financial data of 80 of PLCs from 2015 to 2017 were gathered. This study applied Beneish Model as a detection tool for earnings manipulation and anomalies of red flags and to classify the companies into two groups, which are manipulators and non-likely manipulators. The Independent T-tests were analysed to identify dominating ratios. The results of this study found that M-Score and its three indexes were significantly different for manipulators and non-likely manipulators, which are Sales Growth Index (SGI), Total Accruals to Total Assets (TATA) and Days' Sales Receivable index (DSRI). The percentage of manipulators had slightly decreased in 2016 and gradually increased in 2017. Hence, the inflation or overestimation of sales and revenues, as well as accruals, could signals earnings manipulation.

Doing good does you good? The financial impact of individual CSR dimensions: A Malaysian context

PurposeAlthough corporate social responsibility–corporate financial performance (CSR-CFP) research topics have been widely investigated, previous research has yet to examine the relationship between the specific dimension of CSR and CFP among Malaysian public-listed companies. Through literature review, it has been found that the CSR-CFP studies conducted in Malaysia have omitted the role of workplace diversity dimension in contribution to CFP. Failure to consider this variable may risk misrepresenting the relationship between CSR and CFP, thereby preclude consensus on the direction of the relationship between the variables. The purpose of this study is to investigate the relationship between individual CSR dimensions and CFP.Design Methodology ApproachBy using the CSR dimension disclosure-scoring method and cross-sectional data analysis, this research has conducted a content analysis on annual reports of the sample companies to evaluate the influence of CSR practices on companies’ profitability during 2015.FindingsThe results show that companies displaying CSR behavior are associated with higher CFP. That is to say, there is a positive relationship between CSR and CFP. However, the result has further revealed that the five CSR dimensions in isolation would differently associate with the two proxies of CFP.Originality ValueTo the best of the authors’ knowledge, this is the first study in Malaysia that considers workplace diversity issues as one of the dimensions of CSR. The findings will thus bring new insights into CSR application in Malaysia and its association with the CFP.

Management Control Systems and Performance: The Mediating Role of Organisational Capabilities in Malaysia

ABSTRACT This study focuses on the interactive use of Management Control System (MCS) and the identification of threats and opportunities that enables management to respond quickly to changes in the environment. The study aims to examine, from a resource-based view (RBV) perspective, the relationship between interactive use of MCS and organisational capabilities (market responsiveness, strategic networking, process reliability and efficiency, innovativeness and learning) as well as their subsequent impact on organisational performance. An empirical study was conducted involving 70 public-listed companies in Malaysia. The analysis included the use of descriptive and multiple regression tests. The findings provide empirical evidence that interactive MCS facilitates the development of organisational capabilities and that organisational capabilities play a mediating role in the relationship between MCS interactive usage and organisational performance. This study indicates that companies in Malaysia still focus on financial measures rather than on non-financial ones in most of their decision making. Managers who are short-term focused or financially oriented in their decision making may jeopardise the long-term sustainability of their organisations’ performance. Keywords: Management control system; organizational capabilities; organizational performance; Malaysia

Determinants of environment, social and governance disclosures by top Malaysian companies

Using the resource-based view theory (RBVT) as the underlying theory, this study has aimed to determine the extent of environmental, social, and governance (ESG) disclosures and specifically, to identify the factors that influence the extent of ESG disclosures by Malaysian companies. An index which is known as the modified environmental, social, and governance index (MESGi) was developed to measure the extent of ESG disclosures in the annual reports and sustainability reports of the 67 top Malaysian public-listed companies for the year 2015. The study used hierarchical regression to analyse the relationships between firm internal factors and ESG disclosures. The findings indicated that the extent of ESG disclosures by Malaysian companies was low. The results found that the ISO certification and research and development expenditure had moderate significant relationships with the extent of ESG disclosures by Malaysian companies. The government and policy makers may consider enhancing the existing regulations by requiring the listed companies to provide more ESG disclosures to the stakeholders. It is hoped that the MESGi is able to assist the Malaysian Government to have a more comprehensive and standardised guideline in disclosing ESG information by Malaysian companies.

Divestiture strategy, CEO power and firm performance

PurposeThis study aims to examine the moderating role of chief executive officer (CEO) power on the relationship between divestiture strategy and firm performance by framing the relationship under the agency and power circulation theories.Design/methodology/approachThis study focuses on a sample of 319 non-financial public-listed companies in Malaysia from the year 2012–2016 and estimates the model under two-step generalized method of moments panel regression to eliminate the endogeneity issue.FindingsThe results show that divestiture strategy decreased the firm performance. Meanwhile, greater CEO power changed that divestiture effect but still failed to increase the performance. This study also indicates the CEO power strengthens the relationship between firm performance and divestiture.Research limitations/implicationsThe overall findings show that the positive moderating role of CEO power on the relationship between divestiture and performance. This research confirmed the agency and power circulation theories by showing that CEO power can make divestiture strategy works. However, the moderating plot tells different. CEO power may strengthen the relationship between divestiture and performance; it fails to boost up the performance in overall. Therefore, this study is about CEO power on the strategic decision and gives a good implication for corporate governance concerning the impact of CEO power on the organization’s alignment process.Originality/valueThis study examines the effect of CEO power on the performance of divestiture strategy implementation by contesting the agency and power circulation theories within an emerging country context.