The extent of compliance with FRS 101 standard among Malaysian listed companies on the ACE market

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 compliance with Financial Reporting Standards (FRS) 101, Presentation of Financial Statements, by focusing on corporate governance parameters (board characteristics and ownership structure) and other firm characteristics. Using data drawn from a sample of 105 Malaysian companies listed on the ACE market in 2009, we show that overall disclosure compliance is high (92.5%), We employ an ordinary least square (OLS) regression model to establish whether selected corporate governance and company-specific characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance. Our results indicate that only firm size is positively associated with the degree of compliance. The other variables consisting of board independence, audit committee independence, CEO duality, the extent of outside blockholders’ ownership, and leverage do not show any significant relationship with the 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