Institutional investors are very important for keeping shareholder value high by reducing agency conflict and promoting good governance. Recent governance scandals have placed Malaysia on the global stage, jeopardising the publicly listed companies (PLCs) reputation and calling into question the effectiveness of the country’s corporate governance mechanism. The study aimed to examine the level of agency conflict in Malaysian PLCs and the roles of institutional investors in mitigating agency issues. At the same time, we are exploring unclear institutional investors level of activism in Malaysia and evaluating which roles are considered powerful among institutional investors. The findings demonstrated that institutional investors significantly mitigate agency conflict, with monitoring and dialogue engagement as the most influential roles. Conclusively, the discovery reinstated Type 1 agency conflict (principal-agent) among important issues for corporate governance in Malaysia. The study meets the gaps of prior research in the Malaysian context of agency conflict. It offers a novelty on agency conflict examination in Malaysia as well as exploring institutional investors’ roles and recommending an approach that can be taken to strengthen the governance mechanism among PLCs in Malaysia. The present study advises institutional investors to play aggressive roles in managing agency issues, and relevant bodies need to enhance awareness of agency issues.