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Corporate governance mechanisms and voluntary disclosure of strategic and forward looking information in annual reports
Munirah Dzaraly1, Norziana Lokman2, Sarina Othman3.
Strategic and forward looking information (VDSFLI) is important to the
stakeholders of the company because it provide strategic plan and future direction of the
company. This study aims to examine the relationship between corporate governance
mechanisms and VDSFLI. The VDSFLI is measured by using a disclosure index checklist of
36 items. For each item a score is awarded based on the disclosure made by the companies in
annual reports. All data is collected from the annual reports of 230 public listed Malaysian
companies. The findings of the study revealed that size of audit committee is positively and
significantly influence the level of VDSFLI. While the other corporate governance
mechanisms are not associated with the level of VDSFLI. The study provides evidence in
support of the size of audit committee requirement of Regulatory Framework in Malaysia.
This evidence contributes to the argument on the role of audit committee in reducing agency
conflict and minimise information asymmetry problem which results in high level of VDSFLI.
In addition, the bigger the size of audit committee the better because it would provide positive
signal that company has in place an effective governance mechanism as a check and balance
which encourage voluntary disclosure practices. It also provides direction to the preparers of
the annual report to fully disclose the information voluntarily. This study bridges the gap in
the literature of corporate governance by specifically focuses on VDSFLI practices in
Malaysia context.
Affiliation:
- Universiti Teknologi MARA, Malaysia
- Universiti Teknologi MARA, Malaysia
- Universiti Teknologi MARA, Malaysia
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MyJurnal (2021) |
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Immediacy Index
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