This paper aims to examine the association between corporate sustainability commitment and cash holding and whether the board’s leadership competency moderates the association.
The sample consisted of Islamic banks in Malaysia from 2017 to 2019. The sustainability commitment was measured based on the dimensions of the economic, social and environment of the Sustainable Development Goals (SDG).
The sustainability commitment of the Islamic banks are low. The regression results are not supportive of the hypotheses on the association between corporate sustainability commitment and cash holding and the moderating effect of board’s leadership competency.
The Islamic banks in Malaysia are still in their early stages to achieve the SDGs, but the trend of disclosure suggests that they are gradually embracing the commitment to sustainability practices. It is in support of the agency theory, with findings indicating greater agency cost that is perceived upon companies with greater sustainability commitments.
This paper integrates the dimensions of the SDG with the value-based intermediation guideline by Bank Negara Malaysia in measuring sustainability commitment of Islamic banks.
