The Moderating Role of Shariah Compliance on the Relationship between Ethical Commitment and Corruption in Malaysian Companies

Siti Nurain Muhmad, Ahmad Firdhauz Zainul Abidin, Siti Nasuha Muhmad and Ahmad Fadhli Mat Sidik
Additional contact information
Siti Nurain Muhmad: Universiti Malaysia Terengganu
Ahmad Firdhauz Zainul Abidin: Universiti Malaysia Terengganu
Siti Nasuha Muhmad: Universiti Teknologi Mara Cawangan Terengganu
Ahmad Fadhli Mat Sidik: Kaneka Malaysia Sdn. Bhd.

East Asian Economic Review, 2025, vol. 29, issue 2, 201-241

Abstract: Corporate ethics and corruption have garnered academic attention in recent decades. This study aims to gain insight into the relationship between ethical commitment and corruption and examine the moderating effect of Shariah compliance on this relationship. This study used 453 Malaysian companies from 2012 to 2021. The results indicate that strong ethical commitment helps prevent management and employees from engaging in unethical behaviors that can lead to corruption within the company. However, the effect of ethical commitment on reducing corruption remains consistent, irrespective of a company’s Shariah-compliant status. For the separating samples based on the pre- and post-Malaysian Code of Corporate Governance (MCCG) 2017, the result shows no differences in the relationship between ethical commitment and corruption. However, Shariah compliance companies were found to reduce corruption in the post-MCCG 2017 period. This implies that improving the corporate governance structure seems to better influence corruption levels in Shariah compliance companies. This study contributes to the growing literature on corporate ethics and corruption by empirically examining the role of ethical commitment in mitigating corruption within the context of Malaysian companies. It provides novel evidence on how Shariah compliance influences this relationship, particularly in light of recent regulatory changes brought about by the Malaysian Code of Corporate Governance (MCCG) 2017.

Keywords: Ethical Commitment; Shariah-Compliance; Corruption (search for similar items in EconPapers)
JEL-codes: D73 G38 K42 M14 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dx.doi.org/10.11644/KIEP.EAER.2025.29.2.448 Full text

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:0448

Access Statistics for this article

East Asian Economic Review is currently edited by JE Lee

More articles in East Asian Economic Review from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC.
Bibliographic data for series maintained by JE Lee ().