This article serves two purposes. First, it attempts to examine the joint impact of corporate governance mechanisms and corporate social responsibility (CSR) practice on firm performance. Second, the ...moderating role of board independence is investigated on 588 non-financial Malaysian firms listed on Bursa Malaysia during the period 2006–2017. Both accounting-based return on assets (ROA) and market-based (Tobin’s Q) performance measures have been used for measuring performance. Dynamic model using Generalized Method of Moments (GMM) has been employed on the data set to control for potential endogeneity, reverse causality and dynamic heterogeneity. Findings indicate that ROA is a better determinant of firm performance than Tobin’s Q, where ownership concentration, managerial ownership and money spent on CSR negatively affect ROA; however, an insignificant relationship is observed with Tobin’s Q. Finally, board independence negatively moderates governance-CSR and firm performance relationship. Findings of this article have implications for Bursa Malaysia and Securities Commission Malaysia to reset the limit of independent directors on board so that their unnecessary interference in operations of management may be avoided. Furthermore, companies need to reassess their CSR strategies whether they are spending on CSR activities or hiding their financial malfeasance in the name of money spent on CSR.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
Purpose
The purpose of this paper is twofold. First, it aims to investigate the dynamic impact of board composition (board size, board independence and board diversity) on independent corporate ...social responsibility (CSR) practices (marketplace, environment, community and workplace). Second, it tends to examine the mutual effect of board composition and CSR practices on organizational returns (return on assets and Tobin’s Q) of 631 Malaysian PLCs listed on Bursa Malaysia during 2006-2017.
Design/methodology/approach
The dynamic model (system GMM) provided by Arellano and Bond (1991) and Arellano and Bover (1995) is used for estimations that control for potential dynamic endogeneity, reverse causality, unobserved heterogeneity and simultaneity problems.
Findings
Findings reveal weak linkage between board composition and CSR practices where only board diversity is found to be positively linked to marketplace practices of CSR. Further, the mutual impact of board composition and CSR practices on organizational returns suggests board size be positive and board independence to be negative with Tobin’s Q. Board diversity is negative with ROA and positive with Tobin’s Q. Conversely, CSR practices indicate marketplace practices are positive and community practices are negative with Tobin’s Q, environment practices are insignificant with performance, whereas workplace practices are positive with ROA and negative with Tobin’s Q.
Practical implications
This research is practically considerable for Bursa Malaysia, Securities Commission Malaysia, policymakers, stakeholders, investors and managers. For academia, the theoretical linkages between agency theory, resource dependence theory, resource-based view and stakeholder theory are highlighted. Moreover, methodological underpinnings are also novel for academicians as well as for practitioners.
Originality/value
The paper uncovers multiple aspects: first, it elaborates the dynamic relationship between board composition and CSR practices; second, it examines the combined effect of board composition and CSR practices on company’s accounting and market gains; finally, the study controls for dynamic endogeneity that is the main econometric problem for CG-CSR-performance relationships.
The financial crises over the past two decades were identified as the main reason for the economic collapse. Malaysia suffered the same fate when many organisations crumpled from inappropriate ...compliance of governance mechanisms and corporate social responsibility (CSR) disclosure practices. Given this condition, this study intends to examine the effects of governance mechanisms and CSR practice on firm performance and the moderating effect of board independence is investigated on corporate governance-CSR (CG-CSR) and performance nexus of 588 Malaysian companies listed on Bursa Malaysia between 2006 and 2017. Both accounting-based (ROA) and market-based (Tobin’s Q) performance measures have been used for measuring performance. Dynamic model using Generalized Method of Moments (GMM) has been employed on the dataset to control for potential endogeneity, reverse causality, and dynamic heterogeneity. Findings indicate that ownership concentration negatively affects ROA; chief executive officer (CEO) duality positively affects ROA and negatively affects Tobin’s Q. Moreover, investment on CSR is negatively related to both performance measures. Finally, board independence negatively moderates the CG mechanisms, CSR practice, and performance relationship. Findings of the study have implications for Bursa Malaysia and Securities Commission Malaysia to reset the limit of independent directors on board so that their unnecessary interference in operations of management may be avoided. Furthermore, companies need to reassess their CSR strategies whether they are spending on CSR activities or hiding their financial malfeasance in the name of investment on CSR.
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CEKLJ, FFLJ, NUK, ODKLJ, UL
Abstract
The prime objective of this study is to investigate the legitimate role of corporate boards and corporate social responsibility on the performance of Malaysian listed companies during ...2006–2017. Elements of corporate boards include board size, board independence and board diversity, whereas corporate social responsibility (CSR) dimensions constitute marketplace, environment, community and workplace. Both accounting-based (return on assets ROA, return on equity ROE) and market-based (earnings per share EPS) performance measures have been employed for measuring performance. Pooled ordinary least squares method (OLS) and multiple regressions are used to estimate the dataset. Findings reveal larger board size and higher board independence positively affect firm performance and significantly legitimise the board role in firms. However, the presence of women on Malaysian corporate boards does not legitimate the performance due to their lower percentage on board, hence insignificantly affecting firm value. Additionally, out of four CSR dimensions, only marketplace is positively and significantly related to EPS and negatively and significantly related to ROA. Conversely, environment, community and workplace are insignificantly related to all performance measures, leaving firms in a questionable legitimate state. This study embraces support from agency theory, resource dependence theory, legitimacy theory and stakeholder theory. However, this research raises questionable insights for regulatory bodies and academicians in the form of corporate legitimacy.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
Sustainability risk management (SRM) is an approach that manages the broad spectrum of risks arising from sustainability issues such as climate change, resource depletion and natural catastrophes. ...SRM is an extension to Enterprise Risk Management (ERM) that aims to maximize environmental, social and economic performances for a company’s survival. In an SRM practice, knowledge management is a strategic resource for companies to sustain in the rapidly-evolved business environment. It provides a solution to address the unknown risks associated with environmental complexity. Thus, the aim of this study is to examine the moderating effect of knowledge management on the relationship between SRM critical factors (ERM bases and organizational resil-ience) and company survival among public listed companies (PLCs) in Malaysia. Partial Least Squares Structural Equation Modelling (PLS-SEM) technique is used to analyze the hypothetical model which is developed in this study. The result shows that knowledge management moderates the relationship between organizational resilience and company survival. This finding signifies that knowledge management is an important strategic resource to assist companies to develop effective risk management strategy. This will lead to better decision-making and risk controls which influence stakeholder value and company reputation. The study also finds that ERM bases and organiza-tional resilience were significant towards company survival. Companies with strong ERM bases such as procedures, infrastructure and methods have higher chances of successful SRM implemen-tation. Organizational resilience refers to the ability of a company to manage crises and disaster risks, which is crucial for a company’s survival. This study has both theoretical and practical implications. The result of this study provides relevant insights on the value of knowledge management to meet stakeholder expectations. It also provides a better understanding of the relationship between SRM implementation, its critical factors and company survival.
Corporate scandals and the fall of world leading business organizations have triggered scholars and professionals to re-examine the link between risk management initiatives and the performance of ...business organizations. The objective of this paper is to propose a research framework that intend to examine the influence of Enterprise Risk Management (ERM) success factors on firm financial and non-financial performance. The factors are selected based on critical risk management issues affecting the Nigerian financial industry. The study will have practical implications to business leaders, regulatory agencies, rating agencies and government.
This study explored the relationships among several antecedent factors, namely service characteristics, financing and choice of plan and foreign workers' satisfaction with cooperative health ...insurance (CHI). The study also hypothesized that customer knowledge situation would moderate the relationships among these antecedent factors and foreign workers' satisfaction with CHI. Drawing from a sample of 384 expatriates in Saudi Arabia, we found that service characteristics were positively related to foreign workers' satisfaction with CHI. We also found evidence regarding the relationship between CHI financing and foreign workers' satisfaction with CHI. Similarly, CHI choice of plan was found to be a significant predictor of foreign workers' satisfaction with CHI. Importantly, we predicted that perceived antecedent factors would each interact with customer knowledge in explaining foreign workers' satisfaction with CHI, such that this relationship would be stronger when customer knowledge situation is high and weaker when customer knowledge situation is low. Accordingly, the results generally supported our predictions.
Extant empirical research has established a significant and positive relationship between Cooperative Health Insurance (CHI) service characteristics and expatriates' satisfaction. The present study ...investigated the psychological mechanism underlying these relationships by incorporating customer knowledge as a mediating variable. A self-report survey-based was used to collect data from 384 expatriates employed by both service and manufacturing organizations located in five main regions of Saudi Arabia, representing Central region, the Eastern region, the Western region, the Northern region and the Southern region. Using Partial Least Squares Structural Equation Modeling (PLS-SEM), we found a significant positive relationship between availability of CHI service is positively related to expatriates' satisfaction. Similarly, the results indicated that perceived service quality of CHI had a significant positive relationship with expatriates' satisfaction. As expected, customer knowledge was found to mediate the relationship between availability of CHI service and expatriates' satisfaction. In addition, we also found customer knowledge to be a significant mediating variable between perceived service quality of CHI and expatriates' satisfaction. Implications of the study in the Saudi Arabian context have been discussed.
Corporate scandals and the fall of world leading business organizations have triggered scholars and professionals to re-examine the link between risk management initiatives and the performance of ...business organizations. The objective of this paper is to propose a research framework that intend to examine the influence of Enterprise Risk Management (ERM) success factors on firm financial and non-financial performance. The factors are selected based on critical risk management issues affecting the Nigerian financial industry. The study will have practical implications to business leaders, regulatory agencies, rating agencies and government. Keywords: Enterprise Risk Management, ERM Success Factors, and Firm Performance JEL Classifications: G01, G31
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