Ruhaya Atan, Md. Mahmudul Alam, Jamaliah Said and Mohamed Zamri
The ESG factor, which consists of environmental, social, and governance factors, represents the non-financial performance of a company. United Nations Principles for Responsible…
Abstract
Purpose
The ESG factor, which consists of environmental, social, and governance factors, represents the non-financial performance of a company. United Nations Principles for Responsible Investment invites investors to consider ESG issues when evaluating the performance of any company. Moreover, nowadays, the contribution of corporations towards sustainable development is a major concern of investors, creditors, government, and other environmental agencies. Therefore, the purpose of this paper is to examine the impact of ESG factors on the performance of Malaysian public-limited companies (PLC) in terms of profitability, firm value, and cost of capital.
Design/methodology/approach
A total of 54 companies are selected from Bloomberg’s ESG database that has complete ESG and financial data from 2010 to 2013. This study conducted panel data regressions such as the pooled OLS, fixed effect, and random effect.
Findings
Based on the regression results, there is no significant relationship between individual and combined factors of ESG and firm profitability (i.e. ROE) as well as firm value (i.e. Tobin’s Q). Moreover, individually, none of the factors of ESG is significant with the cost of capital (weighted average cost of capital, WACC), but the combined score of ESG positively and significantly influences the cost of capital (WACC) of a company.
Practical implications
As this is a new study on Malaysia, the findings of this study will be useful to investors, SRI analysts, policy makers, and other related agencies.
Originality/value
To the best of the authors’ knowledge, this study is among the first empirical study to examine the impact of ESG factors on the performance of Malaysian PLC in terms of profitability, firm value, and cost of capital.
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The last chapter of this book grouped the studies that discusses and investigates the relationship between sustainability reporting and firm performance in three different…
Abstract
The last chapter of this book grouped the studies that discusses and investigates the relationship between sustainability reporting and firm performance in three different regions: Europe, Mena and Africa. In Europe, the findings deduced from the empirical results demonstrate that there is significant positive impact of ESG on the performance. However, the relationship between ESG disclosures varies if measured individually; the environmental disclosure positively affects the ROA and TQ, whereas the corporate social responsibility disclosure negatively affects the three models. However, the corporate governance disclosure negatively affects the ROA, ROE and positively affect the Tobin's Q. In Mena, the empirical results show that there are differences in the impact of sustainability reporting (ESG) on firm's operational performance (ROA), financial performance (ROE) and market performance (TQ) between the sectors. Lastly, the findings from Africa show that there is a significant relationship between ESG and operational performance (ROA) and market performance (TQ) with ROA and TQ varying directly with the level of ESG disclosure. However, there is no significant relationship between ESG and financial performance (ROE).
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The chapter reviews the literature on the relationship between sustainability reporting and firm performance. The first section discusses and investigates the relationship between…
Abstract
The chapter reviews the literature on the relationship between sustainability reporting and firm performance. The first section discusses and investigates the relationship between sustainability reporting and operational performance (ROA). The second section discusses and investigates the relationship between sustainability reporting and financial performance (ROE). The third section discusses and investigates the relationship between sustainability reporting and market performance (TQ). The last three sections explain the possible reasons for positive, negative and neutral relationship between sustainability reporting and firm performance.
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Tze Huey Tam, Muhammad Zulkarnain Abdul Rahman, Sobri Harun, Shamsuddin Shahid, Sophal Try, Mohamad Hidayat Jamal, Zamri Ismail, Khamarrul Azahari Razak, Mohd Khairolden Ghani and Yusrin Faiz Abdul Wahab
The present study aims to evaluate the effect of climate change on the flood hazard potential in the Kelantan River Basin using current and future scenarios.
Abstract
Purpose
The present study aims to evaluate the effect of climate change on the flood hazard potential in the Kelantan River Basin using current and future scenarios.
Design/methodology/approach
The intensity-duration-frequency (IDF) was used to estimate the current 50- and 100-year return period 24-h design rainfall, and the climate change factor (CCF) was used to compute the future design rainfall. The CCF was calculated from the rainfall projections of two global climate models, CGCM1 and CCSM3, with different pre-processing steps applied to each. The IDF data were used in the rainfall-runoff-inundation model to simulate current and future flood inundation scenarios.
Findings
The estimated CCF values demonstrate a contrast, whereby each station had a CCF value greater than one for CGCM1, while some stations had a CCF value of less than one for CCSM3. Therefore, CGCM1 projected an aggravation and CCSM3 a reduction of flood hazard for future scenarios. The study reveals that topography plays an essential role in calculating the CCF.
Originality/value
To the best of the author’s knowledge, this is the first study to examine flood projections in the Kelantan River Basin. It is, therefore, hoped that these results could benefit local managers and authorities by enabling them to make informed decisions regarding flood risk mitigation in a climate change scenario.
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This chapter covers a full picture of the remaining chapters. The first part discusses the gap in the literature and the main objectives of this book. The next section overviews…
Abstract
This chapter covers a full picture of the remaining chapters. The first part discusses the gap in the literature and the main objectives of this book. The next section overviews the book's design and methodology which includes the conceptual model, the research design and the research methodology. The final section in this chapter is the book's theoretical and practical contributions.
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This chapter discusses and investigates the sustainability reporting across different sectors. The first section discusses and investigates the relationship between sustainability…
Abstract
This chapter discusses and investigates the sustainability reporting across different sectors. The first section discusses and investigates the relationship between sustainability reporting and primary sector's performance (Agriculture and Food Industries Sector and Energy Sector). The second section discusses and investigates the relationship between sustainability reporting and secondary sector's performance (Manufacturing Sector). The final section discusses and investigates the relationship between sustainability reporting and tertiary sector's performance (Banks and Financial Services Sector, Retail Sector, Telecommunication and Information Technology Sector, and Tourism Sector).
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Heba Ali, Hala M.G. Amin, Diana Mostafa and Ehab K.A. Mohamed
The purpose of this paper is to examine the inter-relations among the strength of investor protection institutions, earnings management (EM) and the COVID-19 pandemic.
Abstract
Purpose
The purpose of this paper is to examine the inter-relations among the strength of investor protection institutions, earnings management (EM) and the COVID-19 pandemic.
Design/methodology/approach
As a proxy for EM, the authors use discretionary accruals measure, estimated using the modified Jones model (1991). As a proxy for the strength of investor protection institutions, the study uses the Investor Protection Index, extracted from the Global Competitiveness Reports. The sample consists of 5,519 firms listed in the Group of Twelve countries during 2015–2020.
Findings
The study shows that firms tend to engage less in EM during the pandemic period. The authors also find a significantly negative relation between the strength of investor protection institutions and EM practices, and interestingly, this negative relation was found to be more pronounced during the pandemic period.
Research limitations/implications
For investors and practitioners, the findings help get insights into the behavior of firms in response of the pandemic shock in countries with solid institutional and legal protection. For policymakers, the findings reaffirm the critical role that institutional incentives and reforms can play, in influencing firms to exert more efforts to promote their financial reporting quality.
Originality/value
To the best of our knowledge, the study is one of the first attempts to examine the link between EM practices and investor protection during the COVID-19 pandemic. The findings extend both the literature on the role of institutional factors in promoting the earnings quality and the literature on COVID-19’s effect on firm performance and practices.
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Zamri Ahmad, Haslindar Ibrahim and Jasman Tuyon
This paper aims to explore the relevance of bounded rationality to the practice of institutional investors in Malaysia. Understanding institutional investor behavior is important…
Abstract
Purpose
This paper aims to explore the relevance of bounded rationality to the practice of institutional investors in Malaysia. Understanding institutional investor behavior is important, as it can determine the asset prices and consequently the market behavior.
Design/methodology/approach
A set of questionnaires is used to solicit information regarding the understanding and practical application of behavioral finance theories and strategies among fund managers in the Malaysian investment management practice. In the process, bounded rational theory is aimed to be validated. Fund managers’ possible bounded rational behavior is assessed with reference to their investment management approaches and strategies right from individual beliefs and acquisition of information, as well as investment management and strategies used.
Findings
The findings lend support to the notion that institutional investors too, being normal human beings, are expected to think and behave in a boundedly rational manner as postulated in bounded rational theory. The sources of bounded rationality are individual, institutional and social forces. Thus, portfolio trading and investment management strategies are exposed to wide varieties of behavioral risks. Despite the notions that behavioral risks are real and the impact on fund performance could be pervasive, fund managers’ self-awareness regarding control and institutional readiness to govern behavioral risks in investment practices is still low.
Research limitations/implications
Empirical evidence drawn in the current paper is subjected to small sample size and specific focus on Malaysian context. Despite this limitation, the sample is statistically sufficient and provides a fair representation, as well as quality opinions, of fund manager’s investment management behavior in Malaysia. This research provides valuable implications to practitioners (fund managers) and regulators (investment management and capital market policymakers). In practice, the current study draws some practical ideas, especially for buy-side institutional investors, on the source and impact of behavioral biases on fund management practices and performance. For regulators, this research highlighted the needs and possible ways to regulate these behavioral risks.
Originality/value
The current paper provides new insights on the theory and practice of the institutional investor. In theory, this research provides evidence of bounded rationality of institutional investor behavior, practicing in the asset management industry in the emerging markets of Malaysia. This evidence lends support to the validity of the bounded rationality theory in explaining institutional investor behavior. In practice, thisresearch provides new insights on the relevance of behavioral finance perspectives and strategies in the asset management industry practice and policy.
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Ben Krishna and Sebastian M.P.
This study aims to propose a model to examine the relationships between e-government development, cybersecurity commitment, business usage and economic prosperity of the country.
Abstract
Purpose
This study aims to propose a model to examine the relationships between e-government development, cybersecurity commitment, business usage and economic prosperity of the country.
Design/methodology/approach
Structural equation modeling was used to analyze the country-level variables to explain the second-order impact of e-government development through the mediating role of cybersecurity commitment.
Findings
Findings suggest that e-government development demonstrated a stronger association with cybersecurity commitment and business usage. There is preliminary evidence that the improvement of cybersecurity measures initiated by e-government development will drive business usage and improve macroeconomic conditions.
Research limitations/implications
This paper has constructed a theoretical model and validated it using publicly available archival data. Further, this study hypothesizes and demonstrates empirically the direct, as well as indirect relationships between e-government development, cybersecurity commitment, business usage and economic prosperity. To summarize, the study unearths the role of a nation’s cybersecurity commitment and how it is associated with other macro parameters in a country.
Originality/value
As an initial step, the present study highlights the pivotal role of e-government and its positive influence on cybersecurity commitment at the country level. Further, this study also recognizes the role of cyber commitment to boost information communication and technology usage in business, the use of e-government services for the profitability of the business and effectively influence economic prosperity.