From disclosure to sustainable performance: how corporate social responsibility disclosure impacts the long-term share price performance of Malaysian IPO

Abstract

Purpose

This paper examines the relationship between the extent and quality of the four dimensions of corporate social responsibility disclosure (CSRD) namely community, environment, workplace and marketplace with the long-run share price performance of Malaysian initial public offering (IPO) companies.

Design/methodology/approach

This study utilised secondary data by the content analysis of the annual reports and Datastream of 115 IPOs listed from 2007 to 2015 in Malaysia. The IPO’s performance was determined by calculating the return measures under the equally weighted and value-weighted schemes of the mean abnormal returns and buy-and-hold abnormal returns covering the three years post-listing using the event-time approach.

Findings

The findings demonstrate that Malaysian IPOs experience substantial overperformance and underperformance when both the IPO performance measures are benchmarked against the matched companies and market. The results indicated that the extent and quality of the community and environment CSRD dimensions are positively and significantly correlated to the IPO’s performance. On the other hand, the extent and quality of the workplace and marketplace CSRD dimensions are negatively and significantly correlated to the IPO performance.

Practical implications

Malaysian regulators could benefit from these findings in their endeavour to carry out a reform process on CSRD to improve its quality. The results of this study are important to investors, regulators, non-government organisations, communities and policymakers. They also enhance the understanding of companies about the importance of disclosing greater CSR information to improve their performance and profitability.

Originality/value

To the researchers' best knowledge, this study provides new insights into the association between CSRD and the performance of Malaysian IPO companies, which is considered important.

Citation

Abbas, Y.A., Ahmad-Zaluki, N.A. and Mehmood, W. (2024), "From disclosure to sustainable performance: how corporate social responsibility disclosure impacts the long-term share price performance of Malaysian IPO", Management of Environmental Quality, Vol. 35 No. 3, pp. 653-683. https://doi.org/10.1108/MEQ-06-2023-0186