Sustainability reporting quality in Malaysia: The intricacy of family controlled and politically connected firms

Abstract

The study contributes to the existing literature by examining the relationship between family‐controlled firms (FCFs), politically connected firms (PCFs), and sustainability reporting quality (SRQ) in Malaysia. The study utilizes panel regression techniques to test the hypotheses. The study's findings revealed that FCFs have a significant negative effect on SRQ. On the other hand, PCFs show a positive significant effect on SRQ. Moreover, the study uncovers a significant and positive interacting effect of PCFs in the relationship between FCFs and SRQ. The implication of this is that politically connected family‐controlled firms (PCFCFs) exhibit higher levels of sustainability performance and disclosure quality. The study offers valuable implications for regulators, scholars, and practitioners. Policymakers can use the insights from this paper to develop regulations and guidelines that encourage family‐controlled firms to improve the quality of their sustainability disclosures. Furthermore, the study provides a foundation for further research in this domain to confirm the result of the present investigation.