Environmental, Social and Governance and the Efficiency of Government-linked Companies in Malaysia

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Qian Long Kweh
Bakhtiar Alrazi
Yee Chuann Chan
Wan Mohammad Taufik Wan Abdullah
Ruzana Mohd Azly Lee


Environmental, social and governance (ESG) are non-financial performance
indicators that help determine financial performance. This study, motivated by the
increasing awareness of various stakeholders about the importance of ESG disclosure,
explores the impacts of ESG on firm efficiency of government-linked companies (GLCs)
in Malaysia from 2006 to 2012. The ESG disclosure is based on the Sustainalytics ESG
Research data available in Bloomberg while data development analysis (DEA) is used to
estimate firm efficiency. This study found that GLCs focused more on governance
disclosures, followed by social and environmental aspects. Governance improved firm
efficiency, but social and environmental factors had no similar effects. In conclusion, this
study provided insight on ESG initiatives which are useful for stakeholders when making
financial and investment decisions.


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