CORPORATE GOVERNANCE, OWNERSHIP STRUCTURE AND ESG PERFORMANCE AMONG MALAYSIAN LISTED FIRMS: THE MODERATING ROLE OF FAMILY OWNERSHIP
DOI:
https://doi.org/10.35631/AIJBAF.825008Keywords:
Agency Theory, Corporate Governance, ESG Performance, Family Ownership, Institutional TheoryAbstract
The study investigates the relationship between corporate governance, ownership structure, and Environmental, Social, and Governance (ESG) performance in Malaysia's capital market, a market that is mainly dominated by family-owned firms. In this setting, concentrated ownership creates agency dynamics that differ from the dispersed-ownership archetype that forms the basis of classical Agency Theory. Prior Malaysian ESG research has paid limited attention to the moderating role of family ownership in board–ESG relationships and to the patterns of governance–ESG associations across environmentally sensitive (ESI) and non-environmentally sensitive (Non-ESI) industries. Based on both Agency and Institutional Theory, the study examines a balanced panel of 377 Main Market-listed firms (1,131 firm-year observations) from 2022 to 2024, with ESG performance assessed using Refinitiv ratings. Board independence and gender diversity are positively associated with ESG performance. Governmental ownership is positively associated with ESG performance in the full sample. The ESI/Non-ESI analysis shows different patterns in the estimated associations, but coefficient differences were not formally tested. Family ownership does not significantly moderate the four board–ESG relationships. Board size, legal expertise, institutional ownership, and foreign ownership are not significantly associated with ESG performance in the full sample. The results offer context-specific evidence that is relevant to both Agency Theory and Institutional Theory, and they indicate that industry context may be important when it comes to the relationship between ownership structure and ESG performance. The findings confirm the importance of board independence and gender diversity. They also suggest that sector-specific ESG guidance warrants consideration alongside broader governance requirements if corporate sustainability is to be strengthened in emerging markets.
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