The impact of ownership structure on corporate reputation: Evidence from Malaysia / Nur Nadhirah Syahirah Zainul Abidin

Nur Nadhirah Syahirah , Zainul Abidin (2024) The impact of ownership structure on corporate reputation: Evidence from Malaysia / Nur Nadhirah Syahirah Zainul Abidin. Masters thesis, Universiti Malaya.

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Abstract

Corporate reputation study has witnessed significant growth and development in recent years. The research indicates a significant association between corporate reputation and corporate performance. Nevertheless, due to the expansive nature of corporate reputation, relying solely on corporate performance may not provide a precise assessment. Further investigation is necessary to identify variables that can accurately gauge corporate reputation. Previous studies conducted in Spain have tried to establish a connection between the structure of ownership and their overall corporate reputation. Based on earlier studies conducted in Spain, it has been determined that family ownership has a detrimental effect on corporate reputation. The statement supports the agency theory, which posits that family ownership might harm a corporate reputation due to conflicting interests between majority and minority shareholders. However, the ownership structure of Spain exhibits diversity, whereas Malaysia's is characterized by concentration. Implementing the study in Malaysia may provide challenges and may not be practically achievable. The study is further motivated to pursue research endeavours, particularly within the context of Malaysia. The primary objective of this research is to examine and gain a comprehensive understanding of the correlation between the structure of corporate ownership and the reputation of corporations operating within the Malaysian business environment. Next, to offer significant insights to businesses, investors, and policymakers in Malaysia, enabling them to make well-informed decisions. It will be achieved by investigating the influence of various ownership patterns on corporate reputation, including family, institutional, foreign, and concentration ownership. Gaining insight into these dynamics can contribute to the existing scholarly research on corporate governance and reputation management. The study employs a total of 519 observations spanning across firm years, explicitly focusing on 173 non-financial enterprises listed on Bursa Malaysia from 2017 to 2019. The results suggest that factors such as family ownership, foreign ownership, and concentration ownership have no significant impact on corporate reputation. On the other hand, a significant positive association exists between corporate reputation and institutional ownership. The research findings are relevant to the agency theory field and benefit shareholders' decision-making process. Future research should consider employing a broader range of measurements to ascertain the most accurate measure of business reputation, using the exact definition provided in this study. Furthermore, the findings of this study hold considerable significance for enterprises in devising efficacious strategies for managing reputation. Additionally, it can aid investors in making informed choices, guide policymakers in formulating corporate governance policies, and foster trust and relationships with stakeholders. Lastly, it enhances the scholarly understanding of corporate reputation, governance, and ownership relations.

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