Measuring compliance with IFRS mandatory disclosure requirements: some evidence from Malaysia

This study examines 225 Malaysian public listed firms’ compliance with IFRS mandatory disclosure requirements during 2008. Two unweighted methods of measuring compliance are used: the dichotomous method and the partial compliance method. The results show that the partial compliance method produces significantly lower aggregate compliance scores. Whilst the partial compliancemethod will produce a more conservative estimate of the aggregate compliance scores, the dichotomous method will give more weight to standards with more disclosure items (e.g., FRS136). By implication, if the dichotomous method is used for regulatory purposes, firms that do not comply with standards with more disclosure items will be more disadvantaged than firms that do not comply withstandards with fewer disclosure items. Overall, this study demonstrates that the two methods produce significantly different compliance scores