AI Technology and Financial Sustainability – Empirical Evidence from Sharia-compliant Transportation and Logistics Companies at Bursa Malaysia

Abstract

This empirical study is driven by the motivation to evaluate the impact of artificial intelligence technology (AI) and prudence financial management on financial sustainability of listed companies in transportation and logistics sector at Bursa Malaysia. Specifically, this study zooms into investigating the operational efficiency and financial strength of the 12 selected Sharia-compliant logistics companies at Bursa Malaysia. These selected companies embrace supply chain analytics and customer intelligence in improving their operational efficiency and sales performance.  This study employs static panel data estimation methods to evaluate the intensity of the relationship between the predictors and financial performance of the Sharia-compliant companies (as measured by closing share price) within the framework of resource management and capital structure theories. This empirical study uses cross-sectional and yearly time series data spanning over five years from 2018 till 2022. The statistical results from Pooled OLS and two-way Fixed Effect model indicate that both business intelligence and prudent financial management are significant determining factors of company's value.  The combination of digital transformation and prudent financing are two critical factors in augmenting the logistics company’s financial resilience in the long-run. A strong positive significant correlation between dividend per share (DPS) and share price (CP) is also observed in this transportation and logistics sector. It is therefore clear to us that the Trade-off theory coupled with Penrose’s Growth theory provide meaningful enlightenments on the variability of the performance of the Sharia-compliant companies over the observed sector.