Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

Azrul Abdullah and Ku Nor Izah Ku Ismail

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the extent of information about hedging activities disclosures within the annual reports of Main Market companies listed on Bursa Malaysia. The extent of hedging activities disclosures is captured through a 32-item-template, which consists of a mandatory and voluntary disclosure scores. The results of this study indicate that the extent of information on hedging activities disclosure is still insufficient among the sampled companies even though the disclosure scored is quite high. This study also examines the relationship between the existence of risk management committee (RMC), its characteristics and the extent of information on hedging activities disclosure in two separate statistical models. The regression results imply that the existence of RMC is positive but does not significantly influence the extent of information on hedging activities disclosure. However its characteristics (i.e. RMC independence and RMC meeting) have a significant influence. The findings may provide some meaningful insights to regulators, policymakers and researchers, towards the establishment of RMC as a part of the internal corporate governance mechanisms. In addition to its existence, the effectiveness of RMC also needs to be emphasized.

Keywords: Derivatives; Disclosure Index; Financial Instruments; Hedging Activities; Risk Management Committee (RMC) (search for similar items in EconPapers)
JEL-codes: M41 M48 M49 (search for similar items in EconPapers)
Date: 2015
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Published in Australian Journal of Basic and Applied Sciences 9.37(2015): pp. 211-219

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