COMMITMENT TO ETHICS AND FINANCIAL PERFORMANCE: THE MODERATING ROLES OF INSTITUTIONAL INVESTORS
The lack of ethical transparency signals that Malaysian companies suffer from unethical practices that can impact company value thus raises the concern of information asymmetry and effective monitoring mechanisms. Drawing from the agency theory, this study examines the relationship between compan...
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| Format: | Thesis |
| Language: | English |
| Published: |
UNIVERSITI MALAYSIA TERENGGANU
2022
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| Online Access: | http://umt-ir.umt.edu.my:8080/handle/123456789/16011 |
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| Summary: | The lack of ethical transparency signals that Malaysian companies suffer from
unethical practices that can impact company value thus raises the concern of
information asymmetry and effective monitoring mechanisms. Drawing from the
agency theory, this study examines the relationship between companies’ ethical
commitment disclosure proxied by ethical commitment index (ECI), and financial
performance (ROA, ROE, EPS, MVA, PE-ratio, and logTOBINq) among Malaysian
publicly listed companies. The introduction of the Malaysian Code of Institutional
Investors (MCII) motivated this study to examine the moderating role of institutional
investors on the relationship between ethical commitment disclosure and financial
performance among Malaysian publicly listed companies. This study developed the
ECI based on prior literature and the recommendations of the Malaysian Code on
Corporate Governance (MCCG). The content analysis of the annual reports of 1115
companies found a slight increment in the level of ECI. However, poor disclosures on
implementation of a code of ethics, whistleblowing, disciplinary actions, and ethics
committee. Panel data analyses of 1115 companies on Bursa Malaysia from year 2012
to 2016 found that higher ECI is associated with higher company performance.
Institutional investors as the moderator weakens the relationship between ECI and
performance. Further analyses found that pressure-sensitive investors do not influence
the relationship between ECI and performance. |
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