The Determinants of Voluntary Risk Disclosures: The Case of Shariah Compliant Companies in Malaysia

Risk reporting is essential in notifying investors on how companies manage the risks they engage in. Even though companies nowadays release information through press releases, corporate websites, and other forms of communications, they still have to disclose more information in their annual reports. The objective of this study is to examine the determinants of voluntary risk disclosures of Shariah compliant companies (ShCCs) in Malaysia, focusing on the religiosity factor and the ownership structure. A quantitative analysis using secondary data was employed as a method to assess the annual reports of 116 Shariah compliant companies in Malaysia for the financial years of 2012 and 2013. The findings of this study reveal that the voluntary risk disclosures in ShCCs on average are not more than sixty per cent. This study indicates no relationship between the religiosity of board members and directors’ ownership to the level of voluntary risk disclosure. More importantly, this study finds the relationship between the existence of government ownership and voluntary risk disclosure in ShCCs. The study adds value to the current body of knowledge in voluntary risk disclosures and suggests the importance of risk management information in the annual reports of ShCCs as Malaysia grows as a leading country in the Islamic economy

Global shifts, theoretical shifts: changing geographies of religion

10.1177/0309132510362602Progress in Human Geography346755-77

Transition to IFRS and compliance with mandatory disclosure requirements: What is the signal?

The present study examines 153 Greek listed companies' compliance with all IFRS mandatory disclosure requirements during 2005 and complements and extends prior literature in the following way. The unique setting i.e., measuring compliance with IFRS mandatory disclosure requirements during the first year of IFRS implementation, allows for examination of the possibility that the changes in the 2004 shareholders' equity and net income, as a result of the adoption of IFRS, constitute explanatory factors for compliance. Thus, this study hypothesises that, in addition to the financial measures and other corporate characteristics that prior literature identifies as proxies for explaining compliance, a significant change in fundamental financial measures, because of the change in the accounting regime, may also explain compliance based on the premises of the relevant disclosure theories. The findings confirm these hypotheses. This study also makes a methodological contribution on measuring compliance with all IFRS mandatory disclosure requirements by using two different disclosure index methods and pointing out the different conclusions may be drawn as a result

The effect of DEFRA guidance on greenhouse gas disclosure

This paper investigates the effect of the 2009 guidance of the Department for Environment, Food & Rural Affairs on greenhouse gas (GHG) disclosure. The sample comprises 215 companies from a population of London Stock Exchange FTSE 350 companies over four years (2008e 2011). To quantify GHG disclosure, a research index methodology is employed, with information derived from several GHG reporting frameworks. The econometric model is estimated using panel fixed effects. Our findings suggest that the publication of the 2009 guidance has had a significant effect on the level of GHG disclosure, and that corporate governance mechanisms (board size, director ownership, and ownership concentration) also affect the extent of GHG information disclosure. The results also indicate that companies increased their disclosures prior to the 2009 guidance in anticipation of its publication. These results have important implications for the government, suggesting that non-mandatory guidance could increase disclosure as much as do mandatory requirements

Board ownership, audit committees' effectiveness and corporate voluntary disclosures

Purpose – The aim of this paper is to examine the linkages between board ownership, audit committees' effectiveness in terms of the proportion of independent non-executive directors (INED) and expert members on the audit committee and corporate voluntary disclosures. Design/methodology/approach – The paper is based on a sample of 124 public listed companies in Malaysia for studying differences in corporate governance characteristics which affect the financial disclosure. Findings – The empirical results indicate that that board ownership is associated with lower levels of voluntary disclosures. The result is consistent with the notion that board ownership increases agency costs resulting from information asymmetry between firm management and outsider investors. The negative relationship between board ownership and corporate voluntary disclosure is, however, weaker for firms with higher proportion of INED on the audit committee indicating that INED moderate board ownership/corporate voluntary disclosure relationship. Overall, the findings lend support for firms with a higher level of board ownership to include more independent directors on the audit committee to increase disclosure levels and reduce information asymmetry between firm management and investors. Originality/value – This paper demonstrates the usefulness of corporate governance factors mainly board ownership and effective audit committee on financial reporting practices. It is expected that this research will have important policy implication to reduce information asymmetry and improves corporate governance.Audit committees, Boards of directors, Corporate ownership, Disclosure, Malaysia, Non-executive directors