Bridging the Transparency Gap: A Case Study of Corporate Governance and Performance in a Perak State Government Agency

Bridging the Transparency Gap: A Case Study of Corporate Governance and Performance in a Perak State Government Agency

Noor Rohin Awalludin, Nisrin Ishak, Norizzatul Fazriyana Rohizat

University Poly-Tech Malaysia, Malaysia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG00162

Received: 05 September 2025; Accepted: 10 September 2025; Published: 13 October 2025

ABSTRACT

This study investigates the relationship between corporate governance (CG) transparency and organizational performance within a single state government agency in Perak, Malaysia. A quantitative, correlational research design was employed, and data were collected from 73 employees through a structured questionnaire. Measures of CG transparency, financial transparency, social transparency, and organizational performance were adapted from established scales in prior studies. Statistical analyses, including correlation and regression, revealed a significant positive relationship between CG transparency and organizational performance, with CG transparency emerging as the strongest predictor. The findings suggest that greater transparency enhances accountability, trust, and operational efficiency. However, because the study was confined to a single agency and relied on purposive sampling, the results cannot be generalized to the wider Malaysian public sector. This study contributes to the literature on transparency in emerging economies by providing context-specific empirical evidence and highlights future research opportunities involving larger and more diverse samples.

Keywords: corporate governance transparency, financial transparency, social transparency, organizational performance, public sector

INTRODUCTION

Transparency in corporate governance has become a central concern in both developed and developing economies. It is widely recognized as a foundation for integrity, accountability, and organizational performance. In Malaysia, high-profile governance scandals, including the 1Malaysia Development Berhad (1MDB) controversy and governance failures in institutions such as Tabung Haji, have underscored the urgent need to strengthen transparency practices across both private and public sectors.

Despite reforms introduced under the Malaysia Code of Corporate Governance (MCCG), transparency gaps persist, particularly in the public sector, where accountability mechanisms are unevenly enforced. Prior studies have established links between transparency and performance in private-sector settings such as banks and listed companies. However, empirical research in Malaysian government agencies remains limited.

The significant of creating awareness of CG transparency has been over decades. Although enforcement of security and policy in managing disclosure and integrity of important information, remain challenge to many sectors. This issue has not resolve. Thus, understanding the intricate relationship transparency and organizational performance, particularly within the context of emerging economies are important. The aftermath of prominent corporate debacles has cast a spotlight on the weaknesses in transparency, emphasizing the broader implications of the transparency deficit (Tarus & Omandi, 2013).

The discourse surrounding organizational transparency has predominantly been shaped by research conducted in developed economies, leaving a void in our understanding of its implications within emerging economies. This gap in knowledge is especially concerning given the distinct corporate   governance structures and accountability mechanisms prevalent in these contexts (Zaman, Arslan, & Siddiqui, 2015).

The objective of this study is to examine the relationship between CG   transparency and organizational performance in a state government agency in Perak. By focusing on a single agency, this research provides context-specific insights into how transparency practices influence organizational outcomes in an emerging economy setting.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

Theoretical Framework

Agency theory suggests that transparency reduces information asymmetry between managers and stakeholders, thereby curbing opportunistic behavior.

These findings are underpinned by the concept that transparency reduces agency costs and fosters greater trust among stakeholders, ultimately leading to enhanced business performance. Companies known for their transparency are perceived as more reliable and trustworthy, which can improve their access to financial resources, lower their borrowing costs, and bolster their reputation in the market.

Corporate Governance Transparency and Organizational Performance

Empirical evidence supports the view that CG transparency improvesorganizational value, operational efficiency, and stakeholder trust (Akhtar, 2021; Haat et al., 2008). In Malaysia, research findings are mixed: some studies  indicate that transparency enhances competitiveness, while others suggest that contextual factors such as family ownership moderate this relationship (Abdul Wahab, 2019).

Research in developing economies further highlights that while institutional enforcement mechanisms are weaker, transparency nonetheless remains a critical determinant of performance (Tarus & Omandi, 2013).

Similar to the concepts of poverty and inequality, corporate governance lacks a singular or unanimous definition that universally underpins its fundamental nature. Different scholars interpret it in diverse ways, aligning with the nuances of various economic environments. Despite these variations, there are shared similarities among the multiple definitions. The preceding section is dedicated to defining a corporation and elucidating the concept of corporate governance based on insights from past literature  (Nina Nurasyekin & SM Abdul, 2019).

Governance transparency pertains to the open disclosure of crucial information concerning a company’s policies, practices, and operational mechanisms. The impact of governance transparency significantly and positively affects a company’s performance. Notably, studies indicate that corporate governance transparency has a more substantial influence on business success compared to social transparency (Tarus & Omandi, 2013).

A study conducted by (Akhtar, 2021) delved into the connection between CG transparency and the performance of businesses within the Malaysian banking sector. The research uncovered a notable positive association between CG transparency and business performance, as evidenced by metrics like return on assets, return on equity, and net interest margin. The study suggests that enhancing CG transparency can enhance the competitiveness of Malaysian banks.

Regarding the connection between CG transparency and the prosperity of Malaysian listed companies, several research studies have revealed contrasting results. For example, research by (Abdul Wahab E. H., 2019) found that the extent of family ownership had an impact on the relationship between CG transparency and firm performance. The study suggested that companies with a higher proportion of family ownership may not experience as much of a performance boost from CG transparency.

In conclusion, governance transparency plays a pivotal role in an organization’s success by facilitating the open disclosure of crucial information related to its policies, practices, and operational mechanisms. Notably, research indicates that CG transparency holds a more substantial impact on business performance compared to social transparency, emphasizing its significance in the corporate world. While governance transparency is undoubtedly crucial for business success, its impact may vary depending on specific contexts and factors. Nonetheless, the consensus remains that fostering CG transparency is a key strategy for enhancing organizational performance and competitiveness, particularly in the Malaysian banking sector.

Hypotheses Development

Based on the theoretical framework and prior literature, the following hypotheses were developed:

H1: Corporate governance transparency is positively associated with organizational performance.

H2: Financial transparency is positively associated with organizational performance.

H3: Social transparency is positively associated with organizational performance.

METHODOLOGY

Research Design

A quantitative, descriptive, and correlational research design was adopted to explore the relationship between transparency practices and organizational performance. Data were collected through an online survey distributed to employees of a state government agency in Perak.

Sample and Sampling Method

Purposive sampling was used to ensure participation by staff with at least one year of service, as such experience was necessary for familiarity with governance practices. Out of a total population of approximately 90 employees, 73 valid responses were obtained, representing a response rate of 81%. While purposive sampling ensured relevance, it limits representativeness beyond this agency.

Measures

Four constructs were measured using established scales adapted for this study. All items were rated on a five-point Likert scale (1 = strongly disagree, 5 = strongly agree). corporate governance transparency; 6 items adapted from Akhtar (2021) and Haat et al. (2008), financial transparency; 6 items adapted from Abdul Rashid (2020), social transparency; 6 items adapted from Sulong (2021) and organizational performance (OP); 7 items adapted from Jeriansyah and Mappanyukki (2020).

Data Analysis

Data were analyzed using SPSS. Descriptive statistics summarized demographic characteristics and variable distributions. Pearson’s correlation tested associations between transparency constructs and organizational performance. Multiple regression analysis was conducted to evaluate the predictive effects of corporate governance, financial, and social transparency on organizational performance.

RESULTS

Demographic Profile

Of the 73 respondents, 45.2% were male and 54.8% were female. Nearly half (49.3%) were aged 18–35, followed by 38.4% aged 36–45, and 12.3% aged 46 or older. The majority (53.4%) were in mid-level positions (Grade 32–52). Respondents were distributed across four departments: administration (37%), finance (30%), legal (8%), and operations (25%).

Reliability

Cronbach’s alpha values exceeded 0.9 for all constructs, indicating strong internal consistency.

Correlation Analysis

Pearson’s correlation revealed significant positive relationships between CG transparency and organizational performance (r = .851, p < .001) and between financial transparency and organizational performance (r = .836, p < .001). Social transparency also demonstrated a positive, though weaker, correlation with performance (r = .821, p < .001).

DISCUSSION

The findings support agency theories by demonstrating that transparency enhances accountability and efficiency within a public sector context. Corporate governance transparency emerged as the strongest predictor of organizational performance, aligning with prior research on private firms (Akhtar, 2021). Financial transparency also significantly contributed to performance outcomes, consistent with the findings of Abdul Rashid (2020).

The relatively weaker role of social transparency suggests that, in government agencies, internal governance and financial disclosure mechanisms may exert a greater influence on performance than external social reporting. Compared with studies in developed economies where institutional enforcement is typically stronger, this case underscores the importance of organizational-level initiatives to improve transparency in emerging contexts

CONCLUSION

This case study of a Perak state government agency demonstrates that corporate governance and financial transparency significantly enhance organizational performance. By fostering accountability, improving decision-making, and strengthening stakeholder trust, transparency is shown to be a critical tool for public sector governance reform in Malaysia

Limitations

This study has several limitations. First, it examined only one government agency in Perak, restricting external validity. Second, purposive sampling limits representativeness and introduces potential bias. Third, the reliance on self-reported survey data raises the possibility of common method bias. Finally, organizational performance was measured perceptually rather than through objective indicators such as audit results or service delivery metrics.

Future Research

Future studies should:

1. Expand to multiple agencies across Malaysia using stratified random sampling.
2. Integrate objective performance indicators such as audit scores and efficiency ratios.
3. Explore mediating mechanisms (e.g., trust, decision-making quality) and moderating factors (e.g., leadership style, organizational culture).
4. Conduct qualitative studies to capture contextual nuances of transparency implementation.

REFERENCES

1. Abduh, M. K. (2020). Corporate Governance, Intellectual Capital and Financial Performance: The Case of Islamic Banks in Malaysia. Journal of Islamic Accounting and Business Research.
2. Abdul Rashid, H. R. (2020). Financial transparency and firm performance: Moderating role of in-stitutional ownership. Journal of Financial Reporting and Accounting.
3. Abdul Wahab, E. H. (2019). The moderating effect of family ownership on the relationship be-tween corporate governance transparency and firm performance of Malaysian listed firms. Interna-tional Journal of Ethics and Systems.
4. Abdul Wahab, M. a. (2019). The Tabung Haji scandal: A governance failure and an ethical chal-lenge. Journal of Financial Crime.
5. Abdullah, C. A. (2019). A Conceptual Analysis of the Tabung Haji Scandal in Malaysia: An Ex-amination of Contributing Factors. International Journal of Academic Research in Business and So-cial Sciences.
6. Abdullah, N. A. (2019). Corporate Social Responsibility and Financial Performance: The Moder-ating Role of Environmental Disclosure. International Journal of Ethics and Systems.
7. Abdullah, S. N. (2006). Board composition, audit committee and timeline of corporate financial reports in malaysia. Journal of Corporate Ownership & Control, 4(2), 33-45.
8. Abu Bakar, Nur Barizah & Saleh, Zakiah & Mohamad, Muslim Har Sani. (2011). Enhancing Ma-laysian Public Sector Transparency and Accountability: Lessons and Issues.           European Journal of Economics, Finance and Administrative Sciences. 31. 133-145.
9. Ahmad Firdhauz Zainul Abidin, H. A. (2019). Ethical Practice Disclosure of Malaysian Public Listed Companies.
10. Ahmed, K. I. (2019). The moderating role of government ownership on the relationship between corporate social responsibility transparency and firm performance. Journal of Cleaner Production.
11. Ahmed, S. S.-N. (2021). The Role of social media in Holding Corporations Accountable for Un-ethical Practices: The Case of Serba Dinamik Holdings Berhad. Journal of Financial Crime.
12. Akhtar, A. L. (2021). Corporate governance transparency and firm performance in the banking sector: Evidence from Malaysia. Journal of Business Research.
13. Alsaedi, T., Sherief, N., Phalp, K., & Ali, ·. R. (2021). Online Social Transparency In Enterprise Information Systems: A Risk Assessment Method. Information Technology and Management, Vol. 23, p 92-124.
14. Aman, A. &. (2020). The Impact of Tabung Haji Scandal on Malaysian Financial System. Inter-national Journal of Academic Research in Business and Social Sciences.
15. Anandarajah, K. (2004). Basic Essentials of Corporate Governance. p. 13.
16. Asante, J. K. (2021). Accounting Irregularities and Firm Performance: Evidence from Serba Dinamik Holdings Berhad. International Journal of Business and Society.
17. Baharom, A. H. (2019). Financial Reporting Quality and Firm Performance: Evidence from Ma-laysian Public Listed Companies. Asian Journal of Accounting Perspectives.
18. Baharom, A. H. (2020). The Relationship between Corporate Governance Transparency and Firm Performance: Evidence from Malaysian Public Listed Companies. Journal of Governance and Integ-rity.
19. Bingwen Liu, M. L. (2019). Can we use interleukin-6 (IL-6) blockade for coronavirus disease 2019 (COVID-19)-induced cytokine release syndrome (CRS)?
20. Bujang, A. S. (2021). Factors influencing consumers’ intention to adopt halal cosmetic products: A review. Journal of Islamic Marketing, .
21. Buniamin, S. A. (2008). An investigation of the association between corporate governance and environmental reporting in Malaysia. Asian Journal of Business and Accounting, 639-647.
22. Chen, Y. H. (2017). Corporate governance, financial transparency and firm performance: Evi-dence from Taiwan. International Journal of Business and Management.
23. Chowdhury, A., & Mavrotas, G. (2006). FDI and growth: What causes what? The World Econo-my, Vol. 29(No. 1), p 9-19.
24. Claessens, J. a. (1999). Corporate distress in East Asia. World Bank Report. .
25. Cleassens, S. a. (2000). Corporate performance in the East Asian , 23-46.
26. Edogbanya, A., & HasnahKamardin. (2016). Company Reporting Transparency and Firm Per-formance In Nigeria. Asia Pacific Institute of Advanced Business and Social Studies, Volume : 2, p 346-356.
27. Fauzi, M. F. (2021). The effect of intellectual capital on firm performance: Evidence from Ma-laysian public listed companies. Journal of Intellectual Capital.
28. Gani, A. A., Ahmed, E. R., & Rahbi, A. H. (2021). Empirical Analysis on Corporate Transparen-cy, Competitive. Journal Of Govenance and Integrity (Jgi), Vol. 4, p 96–102.
29. GH. (2022). WE. DDF. Gorsht, R. (. (2014). Transparency: The New Competitive Advantage,.
30. Haat, M. H., Rahman, R. A., & Mahenthiran, S. (2008). Corporate governance transparency and performance of Malaysian companies. Managerial Auditing Journal, Vol. 23, p 744-778.
31. Haron, H. R. (2019). The Relationship between Corporate Social Responsibility Disclosure and Firm Performance: Evidence from Malaysian Public Listed Companies. International Journal of Business and Society.
32. Hasan, M. R. (2019). The Impact of Corporate Governance on Firm Performance: Evidence from Malaysian Listed Manufacturing Companies. Journal of Business and Retail Management Research.
33. Heng, M. S. (2021). Corporate social responsibility transparency and business performance in the Malaysian construction sector. Journal of Construction in Developing Countries.
34. Henry, D. (2008). Corporate governance structure and the valuation of Australian firms:. Journal of Business Finance & Accounting, Vol. 35, p 912-942.
35. Hj Abdul Wahab, N. I. (2021). The Effect of CSR on the Financial Performance of Top Glove Corporation Berhad. International Journal of Academic Research in Business and Social Sciences.
36. Ho, J. A. (2018). The Influence of Financial Reporting Transparency on Profitability: Evidence from Malaysian Listed Firms. Asian Academy of Management Journal of Accounting and Finance.
37. Ibrahim, N. A. (2018). The Effect of Corporate Governance on the Financial Performance of Pub-lic Listed Companies in Malaysia. International Journal of Economics and Financial Issues.
38. Ismail, I. I. (2020). Governance and Ethical Perspectives on the Tabung Haji Scandal. Journal of Islamic Accounting and Business Research.
39. Janning, Khlif & Ingley, (2020). Transparency Is (Full) Disclosure in Corporate Governance. In book: The Illusion of Transparency in Corporate Governance, Chapter pp57-82.
40. Jeriansyah, W., & Mappanyukki, R. (2020). The Effect of Accountability and Transparency of Regional Financial Management on Local Government Performance. International Journal of Asian Social Science, Vol. 10(No.12), p 721-729.
41. Kengatharan, L. A. (2021). Financial transparency and disclosure in the not-for-profit sector: A systematic review. 31(2), 170-187.
42. Kirby, J. (. (Ed.). (July, 2012). Trust In the Age of Transparency, Harvard Business Review.
43. Leblanc, R., & Gillies, J. (2003). The Coming Revolution in Corporate Governance Ivey. Busi-ness Journal, Vol. 68, p 1-11.
44. Lee, P. J. (2021). Covid-19 pandemic, governance and health and safety issues in Malaysia’s rub-ber glove manufacturing industry. The Asian Journal of Shipping and Logistics.
45. Liew, P. K. (2006). The perceived roles of corporate governance reforms in Malaysia: The view .
46. Lundholm, R. J., & Lang, M. H. (1996). Corporate Disclosure Policy and Analyst Behavior. Ac-counting Review, Vol. 71, p 467-492.
47. Maina, E. K., Gachunga, P. H., Muturi, P. W., & Ogutu, P. M. (2017). Influence of Firm Charac-teristics on the Impact of Disclosure and Transparency in the Performance of Companies Listed in Nairobi Securities. International Journal of Scientific Research and Management, Vol. 5, p 6994-7007.
48. Mohamad, N. (. (n.d.). “Corporate governance in Malaysia”. 2002.
49. Mohd Fauzi, W. N. (2021). Corporate Social Responsibility and Financial Performance: Evidence from Malaysia. Journal of Asian Finance, Economics and Business.
50. Mohd Nasir, N. F. (2021). The impact of financial transparency on the financial performance of Malaysian listed firms during the COVID-19 epidemic. Journal of Financial Reporting and Ac-couting.
51. Mohd Noh, I. K. (2020). Labor exploitation in the time of Covid-19: The case of Top Glove Cor-poration Berhad. Asian Journal of Criminology.
52. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2022). Multivariate data analysis (8th ed.). Cengage Learning.
53. Hayes, A. F. (2022). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach (3rd ed.). The Guilford Press.
54. Schober, P., Boer, C., & Schwarte, L. A. (2018). Correlation coefficients: Appropriate use and in-terpretation. Anesthesia & Analgesia, 126(5), 1763–1768. https://doi.org/10.1213/ANE.0000000000002864
55. Mohd Rosli, N. A. (2021). The Public’s Response to the Top Glove Corporation Berhad Labor Exploitation Scandal in Malaysia. Humanities & Social Sciences Reviews.
56. Neu, D., Warsame, H., & Padwell, K. (1998). Managing Public Impressions: Environmental Dis-closures in Annual. Accounting, Organizations, and Society, Vol. 18 (3), p 374-389.
57. (2012). Using the OECD Principles of Corporate Governance. A Boardroom Perspective. Organisation for Economic Co-operation and Development.
58. Omar, W. Z. (2018). The Effect of Corporate Governance Mechanisms on Firm Performance: Ev-idence from Malaysia. International Journal of Business and Society.
59. Omondi, D. (2015). Mumias Sugar Company doubles full year loss to Sh6 billion on . Standard Digital.
60. Ong, T. S. (2020). The impact of corporate governance transparency on firm performance during COVID-19 pandemic: Evidence from Malaysia. Journal of Accounting & Organizational Change.
61. Purnamasari P, Amran NA, Nu’man AH et al. (2022) Penta-Helix Model of E-Government in Combating Corruption in Indonesia and Malaysia: The Moderating Effect of Religiosity
62. Rahaman, M. M. (2021). The Effect of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from Malaysian Public Listed Companies. International Journal of Ethics and Systems.
63. Rahman, M. N. (2021). Accounting Irregularities and Corporate Governance Failures: Evidence from the Serba Dinamik Holdings Berhad Controversy. Journal of Financial Reporting and Account-ing.
64. Razali, M. A. (2020). Voluntary Disclosure and Firm Performance: Evidence from Malaysian Public Listed Companies. Journal of Financial Reporting and Accounting.
65. Ria & Rita, 2. (n.d.).
66. Sachs, J. (. (1998). “Symposium on global financial markets: the post-bubble Japanese economy and prospects for East Asia”. Journal of Alied Corporate Finance, pp. 16-29.
67. Sari, R. N., & Anugerah, R. (August, 2011). The Effect of Political Influence and Corporate Transparency on Firm Performance: Empirical Evidence From. Journal of Modern Accounting and Auditing, Vol. 7, p 773-783.
68. Sekaran and Bougie R. (2013). Research Methods for Business: A Skill-Building. Wiley.
69. Sekaran, U. &. ((2017). ). Research Methods For Business (7 Ed.). . New York: John Wiley & Sons,.
70. Sekaran, U. (2001). Research Methods For Business : A Skills Building Approach. (2ED). New York: John Wiley & Sons.
71. Sekaran, U., & Bougie, R. J. (2017). Research Methodology For Business (7ED). New York: John Wiley & Sons;.
72. Shah, M. A. (2019). The Impact of Financial Transparency on Firm Performance: Evidence from Malaysian Public Listed Companies. Journal of Financial Reporting and Accounting.
73. Sulong, Z. Y. (2021). Corporate social responsibility (CSR) transparency and business perfor-mance: Evidence from Malaysian listed companies. International Journal of Business and Society.
74. Syed, M. H.-R. (2021). Financial Transparency and Firm Value: Evidence from Malaysian Listed Firms. Journal of Financial Reporting and Accounting.
75. Tan, B. W. (2020). Corporate social responsibility disclosure, stakeholder accountability and firm value during the COVID-19 pandemic. International Journal of Business Research.
76. Tarus, D. K., & Omandi, E. M. (2013). Business Case for Corporate Transparency: Evidence from Kenya. European Journal of Business and Management, Vol. 5(No. 3).
77. Ullah, Z., Rehman, A., & Waheed, A. (2016). The impact of corporate accountability and trans-parency on the performance of manufacturing sector firms listed on KSE. SSRN Electronic Journal.
78. Van Slyke, D. M. (2006). Agents or stewards: Using theory to understand the government-nonprofit social service contracting relationship. Journal of Public Administration Research and Theory,.
79. Yap, Y. C. (2021). Corporate governance transparency and firm performance in Malaysian listed firms. International Journal of Ethics and Systems.
80. Zakaria, Z. &. (2021). The Impact of Accounting Irregularities on the Malaysian Capital Market: The Case of Serba Dinamik Holdings Berhad. Journal of Accounting in Emerging Economies.
81. Zaman, R., Arslan, M., & Siddiqui, M. A. (2015). Corporate Governance and Firm Performance: The Role of Transparency & Disclosure in Banking Sector of Pakistan. International Letters of So-cial and Humanistic Sciences, Vol. 43, p 152-166.
82. Zulkifli, N. A. (2018). Corporate Social Responsibility and Financial Performance: Evidence from Malaysian Manufacturing Firms. International Journal of Engineering & Technology.