Navigating the Nexus of Ownership Structures and Corporate Sustainability Performance: The Amplified Role of Corporate Governance

Abstract

Firm ownership structures in emerging economies possess unique institutional arrangements and influence firm decisions in various ways. Firm decisions and investments are essential for a company to sustain. Primarily driven by the economic dimension, the traditional economic performance of companies is no longer sufficient in the modernised and competitive business environment. Focusing on short-term profits often ignores social and environmental impacts, giving rise to social problems, pollution, environmental degradation and global warming, among others. Corporate governance is a mechanism that can align the interests of various stakeholders and ensure a firm’s long-term success. This study investigates the effect of family (FOWN) and government ownership (GOWN) on corporate sustainability performance (CSP) and the moderating role of corporate governance (CG), using data from 762 annual reports of Malaysian Public Listed Companies from 2020 to 2022. Results indicated a significant negative relationship between FOWN and CSP, while GOWN presented a significant positive relationship with CSP. The CG was also found to play an amplified role in the relationship between FOWN and CSP. However, the moderating role of CG failed to prevail in the association between GOWN and CSP. Additional analysis demonstrated that FOWN significantly and positively affected economic and environmental performance. In contrast, GOWN affected the environmental and social dimensions. The current study enriches people’s understanding of how ownership and governance interact to drive sustainability outcomes, underlining the need for robust governance practices to improve sustainability in family and government-owned enterprises.