Asia Pacific Journal of Management

, Volume 36, Issue 4, pp 937–970 | Cite as

The economic consequences of business sustainability initiatives

  • Chee Kwong LauEmail author


In 2010, Bursa Malaysia (the Malaysian Stock Exchange) introduced an initiative of business sustainability for its public listed companies (PLC) and a number of benefits were listed to encourage the voluntary adoption of this initiative. This study examines the economic benefits achieved by sample Malaysia firms which embarked on different levels of business sustainability initiatives (BSI). A disclosure index, based on a framework of BSI constructs, was used to determine the levels of BSI and quality of disclosures of the sample firms – the FTSE Bursa Malaysia Top 100 (FBM100) Index constituents. It finds that firms with a higher BSI level generally enjoy better firm market value (as proxied by Tobin Q), lower cost of equity and cost of debt. It also provides evidence that while profitable firms are more likely to embark on BSI, such initiatives are in fact more likely to reduce than increase the profitability of firms. The significant associations between the BSI level and its economic benefits reflect the decision usefulness of sustainability reporting and disclosures. Since the framework of BSI constructs reflects the strategic integration of BSI into the sample firms’ strategic management, this suggests that BSI strategic integration is a key to the economic benefits of BSI. The findings provide useful support for Bursa Malaysia, as well as for other stock exchanges around the world – especially those in developing countries – in nurturing BSI as a core element in the strategic management of PLCs and making sustainability reporting mandatory among them.


Business sustainability Firm market value Cost of capital 



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Authors and Affiliations

  1. 1.Nottingham University Business School, University of Nottingham Malaysia CampusSemenyihMalaysia

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