The moderating effect of institutional ownership on the relationship between family ownership and corporate sustainability reporting in Malaysia

In Malaysia, about 70 percent of listed companies are considered as family- owned companies. Agency theory argues that in these companies, agency costs is minimum because the business goals between owners and managers are aligned. However, unique agency problem exists when family members dominate the management and board and this increase information asymmetry between majority and minority shareholders. This study investigates the relationship between family ownership and corporate sustainability reporting and the role of institutional ownership in the relationship. The presence of institutional ownership is predicted to improve CSR disclosure and information asymmetry. Annual reports of 750 listed companies from year of 2020 to 2022 were content analysed to determine the level of CSR disclosures. The study found that family ownership is negatively related to corporate sustainability reporting. The presence of institutional ownership in family-owned companies do not weaken this relationship. This indicates that institutional investors are unable to play effective monitoring role and motivate management in familyowned companies reduce information asymmetry via improving the corporate sustainability reporting. The results of this study are expected to provide inputs to regulatory bodies especially on issues that would improve corporate sustainability reporting specifically in family- owned companies.