The Influence of Corporate Governance And Firm’s Characteristics on The Extent of Compliance With Masb Standards Among Malaysian Listed Companies

PhD Azhar Abdul Rahman, PhD Ku Nor Izah Ku Ismail and PhD Wan Nordin Wan Hussin
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PhD Azhar Abdul Rahman: Associate Professor, College of Business,Northern University of Malaysia (Universiti Utara Malaysia)
PhD Ku Nor Izah Ku Ismail: Professor,College of Business,Northern University of Malaysia (Universiti Utara Malaysia)
PhD Wan Nordin Wan Hussin: Associate Professor, College of Business,Northern University of Malaysia (Universiti Utara Malaysia)

International Journal of Business and Social Research, 2011, vol. 1, issue 1, 153-173

Abstract: This paper contributes to our understanding of compliance with mandatory accounting standards. Specifically, we examine the efficacy of agency related mechanisms on the degree of disclosure compliance with the Malaysian Accounting Standards Board (MASB) accounting standards. Using data drawn from a sample of 170 Malaysian companies listed on the Kuala Lumpur Stock Exchange (KLSE) in 2004, we show that although overall disclosure compliance is high (85.2% of the items of information being disclosed). We employ an ordinary least square (OLS) regression model to establish whether selected company-specific and corporate governance characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance. Our results indicate that only leverage is positively associated with the degree of compliance. The other variables consisting of board independence, audit committee independence, the existence of qualified accountant in the audit committee, CEO duality, the extent of outside blockholders’ ownership and firm size do not show any significant relationship with degree of compliance. These results have important implications for policy because they suggest that whilst agency-related mechanisms may motivate compliance with mandatory standards, full compliance may be unattainable without regulations.

Keywords: Compliance; MASB; accounting standards; Disclosure level; Malaysia. (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:lrc:larijb:v:1:y:2011:i:1:p:153-173

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