Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies

Lokman, Norziana; Cotter, Julie; Mula, Joseph M.

doi:10.22495/cocv10i1c3art3

Cited by 5 publications

(5 citation statements)

References 66 publications

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“…Since the early 2000s, studies have highlighted the significance of CG in the monitoring of operational activities undertaken when managing a business (Aguilera and Cuervo-Cazurra, 2004;Haniffa and Hudaib, 2006;Lokman et al, 2009; Securities Commission Malaysia, 2012). Similarly, the Malaysian Code of Corporate Governance (MCCG, 2012) adopts recommendations and structure from the blueprint issued by the Malaysian Securities Commission in 2012 and sections of the previous 2007 Code.…”

Section: Requirements Of Corporate Governance In Malaysiamentioning

confidence: 99%

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Mgammal

Bardai

Ismail

2018

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Purpose This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct. Design/methodology/approach This study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data. Findings This study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure. Research limitations/implications This study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment. Practical implications The evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies. Originality/value To the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.

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Section: Requirements Of Corporate Governance In Malaysiamentioning

confidence: 99%

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Mgammal

Bardai

Ismail

2018

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“…Firms with high quality corporate governance have incentives to inform investors about this as a signal. In support of this theory, Lokman, Cotter and Mula [19] find empirical evidence that shows that high quality firms signal their corporate governance quality by voluntarily disclosing corporate governance information in annual reports. Disclosures of high corporate governance quality are difficult to replicate by poor quality companies.…”

Section: Voluntary Financial Information and Corporate Governance Qua...mentioning

confidence: 95%

Switching to Semi-annual Financial Statement Reports - Market Reaction, Audit Fee and Corporate Governance Quality

Bar-Hava¹

2021

JFA

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The aim of the research is to examine the reaction of market participants (investors and firms) to a regulatory exogenous shock of easing financial reporting statement regulations. Since 2017, small cap firms, publicly traded on Tel-Aviv stock exchange, are required to publish only Semi-annual reports hence any firm may opt to switch from formerly mandatory quarterly reporting to the currently required semi-annual financial reporting statement. We show that 2/3 of the firms chose to adopt the relief in regulation. In the group of firms that chose to apply the regulation relief, we find a significant negative abnormal market reaction of -2% to the announcement of adopting the relief. In the group of firms that waive the regulation relief and chose to stay on quarterly reporting, we observe a significant positive abnormal market reaction of +2.5% to the announcement of voluntary continuing with the quarterly financial reports. Moreover, for the firms that switch to semi-annual reports, we show a significant decrease of 19.8% in the number of external auditing hours and a significant decrease of 16% in the annual external total audit fee in 2017 as compared to 2016. No significant change in the annual external total audit fee has been observed for the firms that opted not to adopt the abovementioned regulation. We also collect additional information about institutional investor holdings and outside directors which serves on these boards (financial expertise, gender and "busyness") as signals to corporate governance quality. We find positive and significant associations between the voluntarily continue the quarterly financial reporting and high quality corporate governance. The findings of the event study provide a valuable contribution to the ongoing debate on the relevance of the quarterly financial reports to investors. The additional finding of lower corporate governance quality and decreased external audit effort which characterized the firms that adopt the relief represent an increased risk for information asymmetry for investors in such firms thus further reinforces the importance of frequent financial reporting.

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“…Auditor's independence is crucial to maintain the integrity and credibility of the audit process, ensuring that auditors can provide reliable and unbiased assurance to the stakeholders. In the absence of independence, the value of audit services is perceived to be impaired (Lokman & Bakri, 2020).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

An Internal Auditor’s Commitment to Independence: The Effect of Professional Scepticism, Self-Efficacy and Job Satisfaction

Abidin

Zarkasi²,

Hamid³

et al. 2023

AFR

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Internal auditors have found it difficult to exercise independence when management interferes with their work. This is because they are part of and work for the organisation. This study investigated the relationships between professional scepticism, self-efficacy, job satisfaction, and commitment to independence. Data were collected using questionnaires. 77 out of 325 questionnaires were returned from heads of in-house internal auditors of Malaysian listed companies. Multiple regression analysis was utilised to determine the link between the independent and dependent variables. After testing the three hypotheses, the findings indicate that professional scepticism and self-efficacy significantly impact commitment to independence, whereas job satisfaction has no significant impact on them. These associations suggested that the internal auditor is more committed to independence when professional scepticism and self-efficacy are higher. By demonstrating the link between professional scepticism, self-efficacy, job satisfaction, and Malaysian internal auditors' commitment to independence, this study considerably adds to the body of knowledge on internal auditing and management.

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Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies

Cited by 5 publications

References 66 publications

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Switching to Semi-annual Financial Statement Reports - Market Reaction, Audit Fee and Corporate Governance Quality

An Internal Auditor’s Commitment to Independence: The Effect of Professional Scepticism, Self-Efficacy and Job Satisfaction

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