Voluntary Disclosure and Corporate Governance Among Government-Linked Companies in Malaysia

This paper examines the effect of corporate governance characteristics on the extent of voluntary disclosure in the financial reports among government-linked companies (GLCs) in Malaysia. We extend previous researches by simultaneously considering board of directors' composition (as the main or the root of the CG mechanisms, board size, CEO duality, and ownership structure (managerial ownership, and government ownership level) in relationship to the level of voluntary (non-mandatory accounting and non-accounting information) disclosure extent in the 2005 financial reports of thirty (30) listed GLCs in Bursa Saham Malaysia. Our results suggest that the corporate governance-related variables influence the level of information disclosed, thus confirming the hypotheses. In regard to the quality of disclosure, our results on the governance characteristics show that (1) managerial ownership was negatively related to the voluntary disclosure index, (2) the level of government ownership was positively linked to the level of voluntary disclosure extent, (3) the level extent of non-executive directors was negatively related to the voluntary disclosure index, (4) the board size was negatively related to the voluntary disclosure index, (5) the role of duality was negatively related to the voluntary disclosure index. Moreover, our results on the companies specific characteristics indicate that (6) the profitability variables (ROE, ROA) were positively related to the voluntary disclosure index, (7) the Gearing variable was positively related to the voluntary disclosure extent index, and (8) company size was positively related to the level of voluntary disclosure extent. The results of this study might be of interest to regulators, investment analysts, and market participants