The purpose of this study was to investigate the shift in funding reforms at Malaysian public universities. Previous research has shown that shifts in new funding to public universities are more likely to result in a behavioural change at such institutions. This research used agency theory as a practical theoretical framework to analyse relationships between the principal (government) and the agents (public universities), and to predict the effects a change in government funding would have on teaching and research performance in institutions of higher education. In the context of Malaysia as a developing country, this theory has been used to establish a framework for determining the extent to which such institutions meet the Ministry of Higher Education objectives stated in the National Higher Education Strategic Plan beyond 2020. This research design employed a quantitative survey for major data collection, and subsequent qualitative focus group interviews to enable in-depth analysis of the survey findings