Mohd Fahmee Bahaudin¹, Nor Balkish Zakaria^1*, Mohd Faizal Jamaludin² and Marziana Madah Marzuki³

¹Accounting Research Institute, Universiti Teknologi MARA, Malaysia.
²Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch, Malaysia.
³Faculty of Accountancy, Universiti Teknologi MARA Kelantan Branch, Malaysia

ABSTRACT

This paper explores the relationship between board network centrality and environmental, social, and governance (ESG) performance of Malaysian Shariah-compliant public listed companies that operate in dual governance systems. According to the Social Network Theory, we can suggest that the sustainability impacts of network location depend on the structural and temporal factors. Using panel data collected on 186 companies in 2019-2023, we estimate interlocking director networks and estimate a fixed-effects and correlated random-effects model to distinguish the within and between-firm variation. According to our findings, there is a temporal-structural dualism. Although there is a negative relationship between short-term shifts in the location of the brokerage and ESG performance, which implies the existence of coordination costs and monitoring challenges, the presence of companies that are committed to remaining in the brokerage position positively contributes to sustainable performance, which is the manifestation of long-term relational advantages. Measures of centrality, including degree and eigenvector are not able to show the consistent within-firm effects. These findings demonstrate that the assumption that greater connectivity is associated with improved sustainability performance is incorrect and instead depicts that structural brokerage, rather than temporal network mobility, is a strength of governance. This study helps to elucidate the difference between dynamic variation and structural embedding to the body of literature on network governance and provide institutionally sensitive insights into sustainable value creation in Shariah-compliant capital markets.

Keywords:
Board Network Centrality; ESG Performance; Structural Embeddedness; Shariah Governance