Sustainability is concerned with the impact of present actions on the ecosystems, societies, and environments of the future. Such concerns should be reflected in the strategic planning of sustainable corporations. Strategic intentions of this nature are operationalized through the adoption of a long-term focus and a more inclusive set of responsibilities focusing on ethical practices, employees, environment, and customers. A central hypothesis, that we test in this paper is that companies which attend to this set of responsibilities under the term superior sustainable practices, have higher financial performance compared to those that do not engage in such practices. The target population of this study consists of the top 100 sustainable global companies in 2008 which have been selected from a universe of 3,000 firms from the developed countries and emerging markets. We find significant higher mean sales growth, return on assets, profit before taxation, and cash flows from operations in some activity sectors of the sample companies compared to the control companies over the period of 2006-2010. Furthermore, our findings show that the higher financial performance of sustainable companies has increased and been sustained over the sample. Notwithstanding sample limitation, causal evidence reported in this paper suggests that, there is bi-directional relationship between corporate social responsibilities practices and corporate financial performance.

This paper examines the impact of the firm specific factors on the use of derivative instruments for Malaysia firms. We find that there is a significant relationship between the use of derivatives and foreign sales, liquidity, firm growth, managerial ownership and size. Our findings suggest that only a few listed Malaysian firms have appropriate understanding of the derivatives instruments to mitigate risks in international business environment. Most Malaysian managers seem to be risk averse and do not understand the upside of taking position in the derivatives markets.

Purpose -This paper seeks to examine the relationship between board composition and firm performance using a board-level aggregation variable.Design/methodology/approach -This study uses linear regression to analyze the relationship between board role typology and firm performance using a panel data set of 277 non-financial listed Malaysian firms over the period 2002-2007.Findings -The empirical results show that firm-boards with a high representation of outside and foreign directors are associated with better performance compared to those firm-boards that have a majority of insider executive and affiliated non-executive directors.Research limitations/implications -The findings seem to imply that in widely owned firms a higher proportion of outsiders on the board reduces under-investment and agency problems, which has significant economic implications.Originality/value -This is the first study to use a board-level aggregation variable to demonstrate the impact of boards' resourcefulness on firm performance.

No abstract

PurposeThe purpose of this paper is to investigate the market risk disclosure practices among Malaysian listed firms. Specifically, it aims to examine the level of compliance with FRS132: Financial Instruments – Disclosure and Presentation for financial periods beginning or after 2006.Design/methodology/approachThe approach taken is content analysis and coding procedure.FindingsAlthough a large number of companies have shown compliance with FRS132 in relation to disclosing the financial risk management policy, there are systematic differences across companies in terms of level of details (i.e. qualitative and quantitative) disclosure. Interest rate disclosure was the most mentioned category and the credit risk was the least mentioned category of market risk. There is telling evidence that most Malaysian firms did not engage in hedging any type of market risk over the reporting period of 2006‐2007.Research limitations/implicationsThere is a need for some standardized risk reporting format to achieve greater financial transparency to make investors aware of the market risks.Originality/valueThis is believed to be the first study to provide survey findings on the use of derivatives instruments by listed firms in Malaysia.

This paper examines annual environmental protection disclosures of palm oil companies in Malaysia that have signifi cant implications for the preservation of earth, water and air quality. We found that the location of the environmental disclosures vary among the sample companies. We found that the extent of the disclosures on four key items -environmental policy, measurement systems, targets for improvements and impact on biodiversity -has been very low among the sample companies. The paper concludes that unless the gaps in the knowledge of both palm-oil-producing companies and stakeholders regarding environmental protection are addressed, environmental degradation is likely to continue and the corporate 'tick-boxing' trickery would carry on concealing the real picture from stakeholders.

No abstract

Purpose – The purpose of this paper is to describe the role and responsibilities of Shari’ah auditors in Islamic financial institutions (IFIs) in the auditing process in the IFIs, to highlight capacity building challenges in the Shari’ah auditing industry. Design/methodology/approach – The authors used a legitimacy theory to understand linkages between demand for Shari’ah audit and the role of Shari’ah auditors in IFIs complemented with the review the Accounting and Auditing Organization of Islamic Financial Institutions and Auditing Standard for Islamic Financial Institutions to understand the Shari’ah audit work requirements from an Islamic perspective. Findings – Shari’ah auditing is an emerging field of investigation. There is no doubt that conventional auditing has a significant influence on the auditing frameworks used in IFIs. Western auditing practices are undergoing a metamorphosis to meet the needs of stakeholders in the Islamic economic system. The role and responsibilities of auditors in IFIs are much broader than those found in conventional banks in relation to an examination of a variety of contracts, product structures, transactions reporting, preparation of financial statements, reports, marketing circulars and any other legal documents, which are pertinent to IFIs’ operations. Practical implications – We posit that the absence of a proper Shari’ah auditing framework and standards attuned to the needs of an Islamic economic system could dampen the future of the Islamic finance industry. The regulators and management of IFIs should meet the expectations of the stakeholders to whom they owe a duty of care by selecting competent professionals for auditing work, along with transparent policies and systems. Originality/value – This paper presents an attempt to establish auditors’ roles and responsibilities from an Islamic perspective.