This study investigates the relationship between ethical orientation, corporate governance and social responsibility of public listed companies. The data collection process involved two sets of questionnaires. They were sent to 200 companies, listed on the Bursa Malaysia in 2005.

Both sets of questionnaires were required to be answered by the Board of Directors (BODs) or their representatives. The first set of questionnaire was on the BODs’ ethical orientations and the second set was on corporate social responsibility. Corporate social responsibility (CSR) was collected using the primary questionnaire and also through the annual reports of the companies. Only 28 usable responses were received for CSR and 30 for BODs’ ethical orientations.

Two dimensions of BODs’ ethical orientations were examined, namely Machiavellism and practice (M2) and as for Guanxi, the to types examined were networking (G1) and reciprocity behaviour (G2). It was that majority of BODs’ in Malaysia practice networking (G1) as compared to the other ethical orientations. The study found that companies that were 12 years or more in existence, have lower manipulative practice (M2) compared to companies that were established less then 12 years. Flattery (M1) was found to have a negative and significant moderating effect on corporate governance index disclosure (CGID) to CSR disclosure (CSRD). Hence, BODs’ who succumb to flattery (M1) are bound to abandon their fiduciary duties to act without fear in the best interest of the organization.

The level of CSRD for 100 Malaysian PLCs was 8.8%, which is very low. Human Resources theme has the highest number of disclosure, followed by community, product, environment and energy. The study also found that there is a significant difference between the five levels of CSR activities (CSRA). The five level of CSRA (or the 5-level matrix) refer to importance, knowledge, awareness, behaviour and impact. Companies with BODs who are Malays, have academic qualifications and are Muslims, tend to have a higher disclosure level of CSRA compared to Chinese, professional qualifications and other religion respectively.

This study also found that CGID for 100 Malaysian public listed companies is still at a very low level with an average level of 57.24%. It was found that communication matters ranked the highest, followed by audit matters. There is no marked improvement in the CGID for Malaysian PLCs for the period 2002 to 2005. The study also found that better corporate governance will lead to a higher corporate social responsibility.

Research Team :
•  Hasnah Haron
•  Daing Nasir Ibrahim
•  Ishak Ismail
•  Quah Chun Hoo
•  Noor Nasir Kader Ali
•  Yuserrie Zainuddin
•  Ellisha Nasruddin

Institute :
USM