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Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia

As the second largest palm oil producer in the world, Malaysian palm oil industry has contributed significantly to the national GDP. However, this industry has been under criticism for serious deforestation and open burning activities, which obviously opposing to the objective of the oil palm Go...

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Main Authors: Hafizuddin-Syah B.A.M,, S. Shahida,, Siti Hanisah Fuad,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2018
Online Access:http://journalarticle.ukm.my/20488/1/30080-102237-1-PB.pdf
http://journalarticle.ukm.my/20488/
https://ejournal.ukm.my/pengurusan/issue/view/1154
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spelling my-ukm.journal.204882022-11-11T09:05:11Z http://journalarticle.ukm.my/20488/ Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia Hafizuddin-Syah B.A.M, S. Shahida, Siti Hanisah Fuad, As the second largest palm oil producer in the world, Malaysian palm oil industry has contributed significantly to the national GDP. However, this industry has been under criticism for serious deforestation and open burning activities, which obviously opposing to the objective of the oil palm Good Agricultural Practice on zero burning. As a result, sustainability certification of Roundtable Sustainable Palm Oil and Malaysia Sustainable Palm Oil had been introduced towards achieving sustainable development governance in this industry and fulfilling the needs of importing countries on certified palm oil. However, the number of companies with sustainability certification is relatively low due to the concern on potential additional cost, which then could affect firm profitability. Therefore, this study aims to examine the impact of sustainability certification on financial profitability among 39 palm oil companies in Bursa Malaysia, from 2009 to 2016. Based on the GLS estimation model, the finding shows that the profitability of firms with sustainability certification is almost 2% higher than firms without certification. The finding of this study provide useful input for industry players and could encourage palm oil companies to subscribe sustainability certifications to improve their sustainability practices and good governance as well as increase their profits. Penerbit Universiti Kebangsaan Malaysia 2018 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/20488/1/30080-102237-1-PB.pdf Hafizuddin-Syah B.A.M, and S. Shahida, and Siti Hanisah Fuad, (2018) Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia. Jurnal Pengurusan, 54 . pp. 143-154. ISSN 0127-2713 https://ejournal.ukm.my/pengurusan/issue/view/1154
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description As the second largest palm oil producer in the world, Malaysian palm oil industry has contributed significantly to the national GDP. However, this industry has been under criticism for serious deforestation and open burning activities, which obviously opposing to the objective of the oil palm Good Agricultural Practice on zero burning. As a result, sustainability certification of Roundtable Sustainable Palm Oil and Malaysia Sustainable Palm Oil had been introduced towards achieving sustainable development governance in this industry and fulfilling the needs of importing countries on certified palm oil. However, the number of companies with sustainability certification is relatively low due to the concern on potential additional cost, which then could affect firm profitability. Therefore, this study aims to examine the impact of sustainability certification on financial profitability among 39 palm oil companies in Bursa Malaysia, from 2009 to 2016. Based on the GLS estimation model, the finding shows that the profitability of firms with sustainability certification is almost 2% higher than firms without certification. The finding of this study provide useful input for industry players and could encourage palm oil companies to subscribe sustainability certifications to improve their sustainability practices and good governance as well as increase their profits.
format Article
author Hafizuddin-Syah B.A.M,
S. Shahida,
Siti Hanisah Fuad,
spellingShingle Hafizuddin-Syah B.A.M,
S. Shahida,
Siti Hanisah Fuad,
Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
author_facet Hafizuddin-Syah B.A.M,
S. Shahida,
Siti Hanisah Fuad,
author_sort Hafizuddin-Syah B.A.M,
title Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
title_short Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
title_full Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
title_fullStr Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
title_full_unstemmed Sustainability certifications and financial profitability : an analysis on palm oil companies in Malaysia
title_sort sustainability certifications and financial profitability : an analysis on palm oil companies in malaysia
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2018
url http://journalarticle.ukm.my/20488/1/30080-102237-1-PB.pdf
http://journalarticle.ukm.my/20488/
https://ejournal.ukm.my/pengurusan/issue/view/1154
_version_ 1751537468798140416
score 13.211869

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