Integrated reporting disclosure in Malaysia: regulations and practice

Abstract

Purpose Integrated reporting (IR) is a new trend in corporate reporting that has spread rapidly in recent years for disclosing financial and non-financial information. This study aims to assess the status of the current regulations and the trends in IR disclosure practice in an emerging market, Malaysia, by providing a comparative analysis of the IR disclosure level (IRDL) and IR disclosure quality (IRDQ). Design/methodology/approach The current study has developed a comprehensive IR disclosure index based on the international integrated reporting framework (IIRF), which comprises 100 items divided into four categories (background, assurance and reliability, content and form). The data were collected from annual reports of companies listed on the Bursa Malaysia over the three years 2017 to 2019, based on 267 observations. Content analysis technique was used to evaluate and measure IRDL and IRDQ. Descriptive analysis was performed to provide the background statistics of the variables examined. Findings IR regulations are at an early stage, and IR adoption is still voluntary in the Malaysian market. Only 267 Malaysian company-year observations during the years 2017–2019 have adopted IR techniques. However, descriptive analysis results showed that Malaysian companies have moved towards the preparation of IR consistent with the IIRF. The findings indicate a significant increase in both IRDL and IRDQ over this period, after the recent recommendation by the Malaysian code of corporate governance (2017) on adopting IR. Further, the results show statistically significant differences in the mean of IRDL and IRDQ between large and small companies. Practical implications These results are important for regulators and policymakers in articulating new IR legislation in an emerging market and for corporate entities and investors in shaping their understanding of IR disclosure practice in the Malaysian institutional context. Originality/value To the best of the researchers’ knowledge, the study is among the first to address the IR regulation status and practice in Malaysian companies. It also established a comprehensive index for measuring IRDL and IRDQ based on the IIRF. The results add to the meagre descriptive literature on IR practice by providing comprehensive insights into IR practice from the perspective of an emerging country.

Impact of Corporate Governance Characteristics on Integrated Reporting Quality: An Empirical Analysis, Evidence from India

“…Wahl et al (2020) also found IR disclosure has an insignificant association with firm value and earnings forecast accuracy. Qaderi et al (2023) analysed Malaysian listed firms and found IR disclosure levels and quality were significantly improved. Soriya and Rastogi (2023) examined 93 annual reports of Indian companies and found IR quality disclosure is considerably related to firms’ profitability while having an insignificant relationship with firms’ performance.…”

Managing Challenges in the Adoption of Integrated Reporting: A Conceptual Exploration of the Malaysia Context

“…Further, it is argued as in the Malaysian market, IR adoption is still voluntary, and only a handful of companies have adopted IR techniques. Qaderi et al (2021) analyse data from 267 company-year observations between 2017 and 2019 found that the number of Malaysian companies preparing IR in accordance with the IIRF is on the rise with significant differences between large and minor companies' IR practises. Qaderi et al (2021) also argue that the recommendation of the Malaysian code of corporate governance in 2017 has affected the implementation of IR.…”

Board Characteristics and Integrated Reporting Strategy: Does Sustainability Committee Matter?

“…Content analysis was used to measure IR disclosure. This technique has been widely used in IR disclosure research, e.g., [4,17,[99][100][101]. A checklist containing 100 items was constructed based on the IIRF, and divided into four sub-categories: background, form, content, and assurance and reliability.…”

“…The quantity of IR information refers to the extent to which the information disclosed matches the IR disclosure index [107]. IRD_Quan was measured on a binary scale (an unweighted scoring method) that assumed a value of "1" if the company disclosed the IR item in its annual report and "0" otherwise [17,99,107]. The scores were then aggregated to obtain the total score of each category of IR.…”