IDEAS home Printed from https://ideas.repec.org/p/era/wpaper/dp-2024-21.html
   My bibliography  Save this paper

Policy Recommendation to Achieve a Carbon-Neutral Economy: The Case of Corporate Governance and Carbon Performance in Malaysia's Smart Cities

Author

Listed:
  • Siti Indati MUSTAPA

    (UNITEN Business School, Universiti Tenaga Nasional)

  • Noor Raida ABD RAHMAN

    (UNITEN Business School, Universiti Tenaga Nasional)

  • Amar Hisham JAAFFAR

    (UNITEN Business School, Universiti Tenaga Nasional)

  • Nor Salwati OTHMAN

    (UNITEN Business School, Universiti Tenaga Nasional)

  • Syarifah Mardhiah Syed SALIM

    (UNITEN Business School, Universiti Tenaga Nasional)

Abstract

This study explores the role of corporate governance in carbon-intensive and non-carbonintensive companies within Malaysian smart cities. The paper aims to understand the challenges and impacts of corporate governance on carbon and financial performance. In the first stage, carbon emissions data from 51 Bursa Malaysia-listed companies were analysed, revealing that corporate governance had no significant impact on carbon and financial performance. However, variations were noted in carbon-intensive industries. Liquidity emerged as a key factor positively affecting carbon performance, while firm size and market-to-book value were the main drivers of financial performance. In the second stage, a survey of 256 firms highlighted a high level of awareness regarding the significance of carbon reporting practices. Challenges included complexity regarding carbon reporting and knowledge limitations. The study advocates for the centralisation of carbon accounting standards, sharing best practices, and fostering of global collaboration to bolster effective climate action. These findings offer empirical evidence crucial for informing policymakers, companies, investors, and regulators alike. Future research could expand with larger samples, explore digital technology’s role in smart cities, and compare carbon reporting practices globally.

Suggested Citation

  • Siti Indati MUSTAPA & Noor Raida ABD RAHMAN & Amar Hisham JAAFFAR & Nor Salwati OTHMAN & Syarifah Mardhiah Syed SALIM, 2024. "Policy Recommendation to Achieve a Carbon-Neutral Economy: The Case of Corporate Governance and Carbon Performance in Malaysia's Smart Cities," Working Papers DP-2024-21, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2024-21
    as

    Download full text from publisher

    File URL: https://www.eria.org/uploads/Policy-Recommendation-to-Achieve-Carbon-Neutral-Economy-in-Malaysias-Smart-Cities.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Parvez Mia & James Hazelton & James Guthrie, 2019. "Greenhouse gas emissions disclosure by cities: the expectation gap," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 10(4), pages 685-709, June.
    2. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    3. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
    4. Walid Ben-Amar & Millicent Chang & Philip McIlkenny, 2017. "Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project," Journal of Business Ethics, Springer, vol. 142(2), pages 369-383, May.
    5. Fuzhong Chen & Muzzammil Hussain & Jawad Ahmad Khan & Ghulam Mustafa Mir & Zeeshan Khan, 2021. "Voluntary disclosure of greenhouse gas emissions by cities under carbon disclosure project: A sustainable development approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(4), pages 719-727, July.
    6. Haque, Faizul, 2017. "The effects of board characteristics and sustainable compensation policy on carbon performance of UK firms," The British Accounting Review, Elsevier, vol. 49(3), pages 347-364.
    7. Priyanka Aggarwal, 2013. "Sustainability Reporting and its Impact on Corporate Financial Performance: A Literature Review," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 4(3), pages 51-59, September.
    8. Andrew, Jane & Cortese, Corinne, 2011. "Accounting for climate change and the self-regulation of carbon disclosures," Accounting forum, Elsevier, vol. 35(3), pages 130-138.
    9. repec:eme:mfppss:mf-07-2022-0319 is not listed on IDEAS
    10. Jose-Manuel Prado-Lorenzo & Isabel-Maria Garcia-Sanchez, 2010. "The Role of the Board of Directors in Disseminating Relevant Information on Greenhouse Gases," Journal of Business Ethics, Springer, vol. 97(3), pages 391-424, December.
    11. repec:eme:jbsedp:jbsed-03-2021-0027 is not listed on IDEAS
    12. Dwi Ratmono & Darsono Darsono & Selviana Selviana, 2021. "Effect of Carbon Performance, Company Characteristics and Environmental Performance on Carbon Emission Disclosure: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 101-109.
    13. repec:eme:jbsedp:jbsed-11-2021-0148 is not listed on IDEAS
    14. Siddique, Md Abubakar & Akhtaruzzaman, Md & Rashid, Afzalur & Hammami, Helmi, 2021. "Carbon disclosure, carbon performance and financial performance: International evidence," International Review of Financial Analysis, Elsevier, vol. 75(C).
    15. Nekhili, Mehdi & Nagati, Haithem & Chtioui, Tawhid & Rebolledo, Claudia, 2017. "Corporate social responsibility disclosure and market value: Family versus nonfamily firms," Journal of Business Research, Elsevier, vol. 77(C), pages 41-52.
    16. Ward Ooms & Marjolein C. J. Caniëls & Nadine Roijakkers & Dieudonnee Cobben, 2020. "Ecosystems for smart cities: tracing the evolution of governance structures in a dutch smart city initiative," International Entrepreneurship and Management Journal, Springer, vol. 16(4), pages 1225-1258, December.
    17. Yong Li & Bairong Wang & Orachorn Saechang, 2022. "Is Female a More Pro-Environmental Gender? Evidence from China," IJERPH, MDPI, vol. 19(13), pages 1-11, June.
    18. Diogenis Baboukardos, 2017. "Market valuation of greenhouse gas emissions under a mandatory reporting regime: Evidence from the UK," Accounting Forum, Taylor & Francis Journals, vol. 41(3), pages 221-233, September.
    19. Rjiba, Hatem & Jahmane, Abderrahman & Abid, Ilyes, 2020. "Corporate social responsibility and firm value: Guiding through economic policy uncertainty," Finance Research Letters, Elsevier, vol. 35(C).
    20. Giovanna Michelon & Antonio Parbonetti, 2012. "The effect of corporate governance on sustainability disclosure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 477-509, August.
    21. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    22. Guangyu Luo & Jia-Hsi Weng & Qianxue Zhang & Yu Hao, 2017. "A reexamination of the existence of environmental Kuznets curve for CO2 emissions: evidence from G20 countries," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 85(2), pages 1023-1042, January.
    23. Jane Andrew & Corinne Cortese, 2011. "Accounting for climate change and the self-regulation of carbon disclosures," Accounting Forum, Taylor & Francis Journals, vol. 35(3), pages 130-138, September.
    24. Fan, Pengda & Qian, Xuepeng & Wang, Jian, 2023. "Does gender diversity matter? Female directors and firm carbon emissions in Japan," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    25. Stefan Lewandowski, 2017. "Corporate Carbon and Financial Performance: The Role of Emission Reductions," Business Strategy and the Environment, Wiley Blackwell, vol. 26(8), pages 1196-1211, December.
    26. Robert G. Eccles & Ioannis Ioannou & George Serafeim, 2014. "The Impact of Corporate Sustainability on Organizational Processes and Performance," Management Science, INFORMS, vol. 60(11), pages 2835-2857, November.
    27. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2020. "An Efficiency Perspective on Carbon Emissions and Financial Performance," Ecological Economics, Elsevier, vol. 175(C).
    28. Stephen Bear & Noushi Rahman & Corinne Post, 2010. "The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation," Journal of Business Ethics, Springer, vol. 97(2), pages 207-221, December.
    29. Aman, Hiroyuki & Nguyen, Pascal, 2008. "Do stock prices reflect the corporate governance quality of Japanese firms?," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 647-662, December.
    30. Amir Barnea & Amir Rubin, 2010. "Corporate Social Responsibility as a Conflict Between Shareholders," Journal of Business Ethics, Springer, vol. 97(1), pages 71-86, November.
    31. Christian Ott & Frank Schiemann, 2023. "The market value of decomposed carbon emissions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(1-2), pages 3-30, January.
    32. repec:hal:journl:hal-02311990 is not listed on IDEAS
    33. Nguyen Thi Hoa Hong & Tran Khanh Linh, 2023. "Institutional investors, corporate governance and firm performance in an emerging market: evidence from Vietnam," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2159735-215, December.
    34. Nur Fatin Kasbun & Boon Heng Teh & Tze San Ong, 2016. "Sustainability Reporting and Financial Performance of Malaysian Public Listed Companies," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 8(4), pages 78-93, October.
    35. Abu-Tapanjeh, Abdussalam Mahmoud, 2009. "Corporate governance from the Islamic perspective: A comparative analysis with OECD principles," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(5), pages 556-567.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konadu, Renata & Ahinful, Gabriel Sam & Boakye, Danquah Jeff & Elbardan, Hany, 2022. "Board gender diversity, environmental innovation and corporate carbon emissions," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    2. Nurshahirah Abd Majid & Amar Hisham Jaaffar, 2023. "The Effect of Women’s Leadership on Carbon Disclosure by the Top 100 Global Energy Leaders," Sustainability, MDPI, vol. 15(11), pages 1-26, May.
    3. Nurshahirah Abd Majid & Amar Hisham Jaaffar & Raed Hussam Mansour Alzoubi, 2023. "The Impact of Women’s Role in Corporate Governance on Carbon Disclosure Performance: A Descriptive Study of Top 100 Global Energy Leaders," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 404-417, November.
    4. Shahbaz, Muhammad & Karaman, Abdullah S. & Kilic, Merve & Uyar, Ali, 2020. "Board attributes, CSR engagement, and corporate performance: What is the nexus in the energy sector?," Energy Policy, Elsevier, vol. 143(C).
    5. Khwaja Naveed & Cosmina L. Voinea & Zahid Ali & Fawad Rauf & Cosmin Fratostiteanu, 2021. "Board Gender Diversity and Corporate Social Performance in Different Industry Groups: Evidence from China," Sustainability, MDPI, vol. 13(6), pages 1-15, March.
    6. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).
    7. Govindan, Kannan & Kilic, Merve & Uyar, Ali & Karaman, Abdullah S., 2021. "Drivers and value-relevance of CSR performance in the logistics sector: A cross-country firm-level investigation," International Journal of Production Economics, Elsevier, vol. 231(C).
    8. Abbasi, Kaleemullah & Alam, Ashraful & Borhan Uddin Bhuiyan, Md. & Tariqul Islam, Md, 2024. "Does female director expertise on audit committees matter for carbon disclosures? Evidence from the United Kingdom," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 55(C).
    9. Kara, Alper & Nanteza, Aziidah & Ozkan, Aydin & Yildiz, Yilmaz, 2022. "Board gender diversity and responsible banking during the COVID-19 pandemic," Journal of Corporate Finance, Elsevier, vol. 74(C).
    10. Lucrezia Songini & Anna Pistoni & Patrizia Tettamanzi & Fabrizio Fratini & Valentina Minutiello, 2022. "Integrated reporting quality and BoD characteristics: an empirical analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(2), pages 579-620, June.
    11. Shubham Singhania & Jagvinder Singh & Deepti Aggrawal, 2023. "Gender diversity on board and corporate sustainability: a quantitative review based on bibliometric mapping," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(1), pages 267-286, February.
    12. Ayman Issa & Mohammad A. A. Zaid & Jalal Rajeh Hanaysha, 2022. "Exploring the relationship between female director's profile and sustainability performance: Evidence from the Middle East," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1980-2002, September.
    13. Aono, Kohei & Okimoto, Tatsuyoshi, 2023. "When does the Japan Empowering Women Index outperform its parent and the ESG Select Leaders Indexes?," International Review of Financial Analysis, Elsevier, vol. 85(C).
    14. Paul B. McGuinness & João Paulo Vieito & Mingzhu Wang, 2020. "Proactive government intervention, board gender balance, and stakeholder engagement in China and Europe," Asia Pacific Journal of Management, Springer, vol. 37(3), pages 719-762, September.
    15. Haque, Faizul & Jones, Michael John, 2020. "European firms’ corporate biodiversity disclosures and board gender diversity from 2002 to 2016," The British Accounting Review, Elsevier, vol. 52(2).
    16. Atif, Muhammad & Hossain, Mohammed & Alam, Md Samsul & Goergen, Marc, 2021. "Does board gender diversity affect renewable energy consumption?," Journal of Corporate Finance, Elsevier, vol. 66(C).
    17. Jibriel Elsayih & Rina Datt & Qingliang Tang & Ali Hamid & Maria Estela Varua, 2023. "Exploring the determinants of carbon management system quality: The role of corporate governance and climate risks and opportunities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4065-4091, December.
    18. Shu, Pei-Gi & Chiang, Sue-Jane, 2020. "The impact of corporate governance on corporate social performance: Cases from listed firms in Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    19. Gull, Ammar Ali & Atif, Muhammad & Hussain, Nazim, 2023. "Board gender composition and waste management: Cross-country evidence," The British Accounting Review, Elsevier, vol. 55(1).
    20. René P. Orij & Saif Rehman & Hashim Khan & Faisal Khan, 2021. "Is CSR the new competitive environment for CEOs? The association between CEO turnover, corporate social responsibility and board gender diversity: Asian evidence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 731-747, March.

    More about this item

    Keywords

    Carbon performance; corporate governance; financial performance; energy; smart city; carbon neutral;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:era:wpaper:dp-2024-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ranti Amelia (email available below). General contact details of provider: https://edirc.repec.org/data/eriadid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.