The Moderating Role of Institutional Investor on The Relationship Between Firm’s Financial Performances and Social Performance: Malaysian Evidence
Peranan Pelabur Institusi dalam Hubungan Prestasi Kewangan dan Prestasi Sosial: Kajian di Malaysia
Keywords:
Corporate Social Performance, Financial Performance, GRI, Corporate GovernanceAbstract
Over the past two decades, policy makers, investors, academicians, government, and
public at large have paid increased attention to social performance (SP). Companies
with stronger social performance are more likely to attract consumers, employees and
investors, increases sales and market shares and decrease business risk. Apparently,
social performance has a positive effect on a company. Thus, it is important for
company to consider social performance in their decision-making. Therefore, it can be
concluded that company should focus on achieving good social performance as part of
overall performance of organization. This study aims to re-examine the relationship
between financial performance and social performance and the role of Institutional
investor on the relationship. The slack resource theory would be utilized to test the
research framework. The theory argues that companies who are financially strong
would have slack resources that would provide the opportunity for companies to invest
in social activities such as community relations, employee relation, and environment.
If slack resources are available, better FP would be a predictor for better SP. This
study introduces moderator variable of Institutional Ownership (IO) that expected to
enhance the relationship between FP and CSP. Sample of this study comprises of top
262 public listed companies in Bursa Malaysia for the financial year ended 2012. The
results of the regression analysis provide a support for slack resource theory, that is,
financially strong companies have a positive and significant relationship with CSP.
Furthermore, this study supports the role of IO to moderate the relationship.
Institutional investor, owing large equity, has a greater voting power compared to
small equity holder and plays an important role in advising and influencing top
management in business decision making. Thus, it is believed that institutional
investors will use their significant influencing power to convince management to
spend slack resources on social performance.
Sejak dua dekad yang lalu, penggubal dasar, pelabur, ahli akademik, kerajaan, dan
orang ramai telah memberi perhatian kepada peningkatan prestasi sosial (SP oeh
syarikat). Ini adalah kerana syarikat yang mempunyai prestasi sosial baik lebih
cenderung untuk menarik pengguna, pekerja dan pelabur, meningkatkan nilai jualan
dan harga saham dan ianya juga boleh mengurangkan risiko perniagaan. Oleh itu,
prestasi sosial yang baik mempunyai kesan positif ke atas syarikat. Oleh itu, adalah
penting bagi syarikat untuk mempertimbangkan prestasi sosial dalam proses membuat
keputusan. Oleh itu, dapat disimpulkan bahawa syarikat perlu memberi fokus kepada
mencapai prestasi sosial yang baik sebagai sebahagian daripada prestasi keseluruhan
organisasi. Kajian ini bertujuan untuk mengkaji hubungan antara prestasi kewangan
dan prestasi sosial dan peranan pelabur institusi dalam hubungan tersebut. Teori
lebihan sumber akan digunakan untuk menguji rangka kerja penyelidikan. Teori ini
berpendapat bahawa syarikat-syarikat yang kukuh dari segi kewangan akan
mempunyai lebihan sumber (slak) yang akan memberi peluang kepada syarikatsyarikat
untuk melabur dalam aktiviti sosial seperti hubungan masyarakat, hubungan
pekerja, dan alam sekitar. Prestasi kewangan (FP) yang lebih baik dikatakan akan
meyumbang kepada SP lebih baik. Jika terdapat lebihan sumber (slak) dari prestasi
kewangan yang lepas maka, prestasi kewangan yang baik ini akan menjadi peramal
untuk prestasi sosial yang lebih baik Kajian ini memperkenalkan moderator
pembolehubah iaitupelabur institusi (IO) yang dijangka akan meningkatkan hubungan
antara FP dan SP. Sampel kajian ini terdiri daripada 262 syarikat awam yang
disenaraikan dalam Bursa Malaysia bagi tahun berakhir 2012. Keputusan analisis
regresi menyokong teori lebihan sumber, iaitu, syarikat-syarikat kewangan yang
kukuh mempunyai hubungan yang positif dan signifikan dengan SP. Kajian ini
menyokong peranan IO sebagai penyederhana dalam hubungan FP dan SP. Pelabur
institusi biasanya mmempuyai pegangan ekuiti yang besar dalam syarikat maka
mempunyai lebih kuasa dalam mempengaruhi keputusan syarikat berbanding dengan
pemegang ekuiti kecil. IO juga memainkan peranan yang penting dalam memberi
nasihat dan mempengaruhi pengurusan atasan dalam membuat keputusan
perniagaan. Oleh itu, ia dipercayai bahawa pelabur institusi akan menggunakan
penaruh kuasa mereka untuk meyakinkan pengurusan untuk meggunakan lebihan
sumber syarikat ke arah meningkatkan prestasi sosial.
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