Corporate governance and company boardroom consideration in Malaysia: Triple-Bottom Line insights

Abstract

Attempts to test the impact of different boardroom characteristics relative to Triple-Bottom Line (TBL) performance in Malaysia has been limited. This study will offer such insights using a relatively new dataset from the Asian Sustainability Rating Index 2009. Using correlation tools, the study found no relationship between board characteristics and TBL performance, thus, this suggests that alternative control mechanisms should be created to steer the board's decision to maximize the interest of stakeholders. It showed that the board's incentive to maximize TBL performance is still lacking as compared to financial performance. The implications from the results are: companies can improvise the existing metrics of evaluating good governance from the non-financial stakeholder perspective in Asian Sustainability Rating Index and the control mechanisms can benefit Malaysia or any developing countries in the improvement of sustainability rating such as FTSE4good that has been established in the United Kingdom. Lastly, the findings offer additional information relating to TBL scenario in a different quality of board governance to interested parties by providing empirical support from the Asian perspective relating to TBL scenario in different corporate governance environment.

The influence of bank governance structure on green credit

“…Mehran (1995) and Kato et al (2007) explored the relationship between executive equity incentive and company performance with mixed industry enterprises as samples, and they found that there is a significant positive correlation between them [65,66]. Ahmad et al (2012) pointed out that there is a significant positive correlation between executive shareholding ratio and corporate governance, indicating that executive equity incentive plays an obvious role in improving governance level and performance [67]. Executive compensation can link the interests of the management layer and shareholders, so as to improve the enthusiasm and effort of the management layer and promote the efficiency of resource allocation.…”

Influence of board characteristics on TBL reporting

“…These firms would, therefore, engage and disclose more TBL disclosures in the annual report. However, it must also be admitted that a simple board structure will prevent coordination problems and will thus make decisions on the TBL engagement easier (Ahmad et al, 2012). Also, according to Busta and Hobdari (2015), larger boards are both slower at making decisions and less effective at monitoring management because of free-riding problems.…”