What causes forward-looking information disclosure in a dynamic setting? Evidence from Malaysia: a developing country

Imad H. Almhuob Muftah and Yuserrie Bin Zainuddin

International Journal of Accounting, Auditing and Performance Evaluation, 2025, vol. 21, issue 3/4, 513-547

Abstract: This paper examined the factors influencing Forward-Looking Information Disclosure (FLID), including corporate governance, International Financial Reporting Standards (IFRS), and earnings management, while controlling for firm-specific variables. Endogeneity issues have plagued previous similar studies. Therefore, this study utilised a robust dynamic estimation approach (i.e., Sys-GMM) to address these concerns. Analysing a large dataset of listed companies in Malaysia over nine years, the study found that earnings management, IFRS, and firm size were significant drivers of FLID. Accounting for various sources of endogeneity, the study discovered that board size and independence negatively impacted FLID. This research's novelty lies in its dynamic approach to investigating the determinants of FLID, making it valuable for regulators and policymakers interested in improving information flow in annual reports. The study suggests that non-IFRS-adopting countries may benefit from adopting IFRS to enhance financial disclosure quality.

Keywords: corporate disclosure; forward-looking information; IFRS; International Financial Reporting Standards; earnings management; corporate governance; endogeneity; system GMM; Malaysia. (search for similar items in EconPapers)
Date: 2025
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