Corporate Sustainability Commitment, Institutional Investors and Financial Performance: Evidence from Malaysia

This study examines whether corporate commitment towards sustainability contributes to financial performance and the moderating role of institutional investors toward relationship between sustainability commitment and financial performance.The monitoring role by institutional investors is also expected to be able to align sustainability practices with the company's financial objectives.The sample includes Malaysian companies listed on the main board of Bursa Malaysia from 2015 to 2021, with a total observation of 256 companies.Data were collected from Refinitiv-Eikon Thomson Reuters.Findings indicated that higher corporate sustainability commitment (CSC) does associate with higher financial performance.In addition, the presence of institutional investors positively affects the financial performance of companies, however, weakens the effect of CSC on financial performance.This study provides insights for Malaysian regulators on the importance of sustainable practices toward value creation and achieving the 2030 Agenda for Sustainable Development.Additionally, it provides insights from the perspectives of agency theory, by which companies can create better values when their commitment towards sustainability practices is monitored by the presence of institutional investors.