The Impact of Sustainability Practices on Share Performance with Mediation of Board Members Experience: A Study on Malaysian Listed Companies

Uzair Bhatti, Noralfishah Sulaiman
2022 International Journal of Financial Studies  
The purpose of this paper is to explore the impact of ESG sustainability practices (i.e., Environmental, Social, Governance/economic) on share performance. Moreover, the objective of the study is to investigate the sustainability practices with mediation of board member experience, which might contribute in maintaining the share performance. The study is unique in such a way that instead of analysing the stated relationship with internal financial performance measures such as return on asset
more » ... A) or return on equity (ROE), this study will investigate the relationship using external performance measures such as firm share performance. In this research, data were collected from 100 Bursa Malaysia listed companies using purposive sampling during the sampling period from 2017 to 2020. The data were analysed using the Autoregressive Distributed Lag (ARDL) bound testing model instead of a traditional regression model to examine the causal relationship. The results of the study showed the long-run steady relationships through the error correction term (ECT) at the optimum lag. Further, the findings also revealed that there is no short run association between the sustainability practices and the stock performance with mediation of the board experience. The findings also showed that sustainability practices have a significant impact on share performance with mediation of board experience. It is found that sustainability practices, especially environmental and social, are essential to attract investors. The results have also demonstrated that a board of directors of different ages has different knowledge, competencies, and expertise which could prove beneficial in terms of board diversity that decides to adapt the best sustainability practices. These findings provide some inference for future research on the relationship of sustainability practices and share performance with other mediating factors of board attributes.
doi:10.3390/ijfs11010004 fatcat:bndxxcnqnrgylf733pbaeldxea