Determinants of environmental reporting in Malaysia for industrial product sector

Following the new Malaysian Code on Corporate Governance (MCCG) 2012, the Malaysian government hopes to encourage companies, specifically the Public Listed Companies to adhere to the new code of conduct. The Adherence to the MCCG guidelines works together with the Listing Requirements by Bursa Malaysia that call for disclosure on environmental as part of the Corporate Social Responsible Report in the companies' annual report. Thus, this study is motivated to examine the determinants that are associated to promote the environmental reporting disclosure practices of corporations in Malaysia. In particular, this study aims to examine two influential factors that affect environmental reporting disclosures which are corporate governance characteristics (i.e., board size, board independence, board diversity - religion and board diversity - gender) and corporate characteristics (i.e., company size, profitability, and free cash flow). The study uses a total of 100 samples from the industrial product corporations listed on Bursa Malaysia for the year 2013. The study employs OLS and Tobit regression inclusive of robust regression for both models. The results indicate that board diversity of religion (Muslim directors); company size; profitability; and free cash flow have positive significant influence on environmental reporting disclosure practices. In summary, the study concludes that for the industrial product sector, the initiative for companies to disclose environmental reporting is much influenced by companies that have Muslim directors, with large amount of assets, with higher profitability and a large amount of extra cash. All in all, the companies are able to comply to any government's initiative towards a sustainability economy, provided the company applies the Taqwa paradigm as the foundation for good governance and the company is secured financiall