Title: Determinants of compliance and disclosure requirements by top listed companies under Malaysian Code of Corporate Governance (2012)

Authors: Prem Lal Joshi; Nik Mohamad Zaki Sallah; Hamsatulazura Hamzah; Shaista Wasiuzzaman; Anbalagan Krishnan

Addresses: Faculty of Management, Multimedia University, Jalan Multimedia, 63100 Cyberjaya, Selangor, Malaysia ' Faculty of Management, Multimedia University, Jalan Multimedia, 63100 Cyberjaya, Selangor, Malaysia ' Faculty of Management, Multimedia University, Jalan Multimedia, 63100 Cyberjaya, Selangor, Malaysia ' Faculty of Management, Multimedia University, Jalan Multimedia, 63100 Cyberjaya, Selangor, Malaysia ' Faculty of Business and Humanities, Curtin University, Sarawak Campus, CDT 250, 98009, Miri, Sarawak, Malaysia

Abstract: This study examines the compliance and disclosure levels of corporate governance practices of Malaysian firms under the MCCG 2012. Additionally, the study aims to deepen our understanding of the main drivers of corporate governance reporting in one of the fast developing countries in Asia. Data for 84 top companies listed with Bursa Malaysia are extracted from their 2013 annual reports. Sixty-four corporate governance disclosure items are utilised to develop a disclosure index which is taken as the dependent variable. The overall voluntary compliance and disclosure in Malaysia's top listed companies is good with an average of 77.1%, with minimum compliance level being 50% and maximum being 90%. Firm characteristics and corporate governance mechanisms are taken as the independent variables. Using OLS regression, the study finds that board size, institutional ownership, foreign ownership, profitability, and auditor size are the main determinants of corporate governance disclosure in Malaysia under MCCG 2012. The paper contributes to literature on disclosure and the reported findings are broadly consistent with the notion that good corporate governance generally leads to better corporate disclosure and transparency in developing capital markets.

Keywords: corporate governance; corporate disclosure; transparency; capital markets; institutional ownership; foreign ownership; profitability; auditor size; MCCG 2012; board size; compliance; Malaysia.

DOI: 10.1504/AAJFA.2016.077333

Afro-Asian Journal of Finance and Accounting, 2016 Vol.6 No.2, pp.135 - 159

Available online: 24 Jun 2016 *

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