Investigating the effects of horizontal interlocks on firm sustainable growth in Malaysia

Abstract

The purpose of this study is to investigate the relationship between horizontal interlocks and firm sustainable growth in Malaysian listed companies. Industry is viewed as a moderating factor in the relationship between horizontal interlocks and firm sustainable growth in this study. The results demonstrate that there is a strong negative relationship between horizontal interlocks and firm sustainable growth, which implies that there are toxic practices driven by the directors’ need for long-term market survival, competition, and expansion strategy. Furthermore, the results show that industry plays a major role in the relationship between horizontal interlocks and firm sustainable growth. This study expands current literature on firm performance that ignores firm sustainable growth as the key indicator of performance for a business to survive and provides evidence for regulators and policy makers on the need to restructure current regulations pertaining to corporate governance.