Rina Fadhilah Ismail

Corporate governance structure, regulatory regimes and voluntary disclosures

Voluntary disclosures communicated to investors are subject to considerable discretion of the disclosing companies. While regulated disclosure under the IFRS convergence could be a solution to greater transparencey, the benefits of such disclosure is still inconclusive. Hence, it is important to monitor managers voluntary disclosure decisions to be more align with the interests of the investors. Using the annual reports of 155 Malaysian listed companies, this study examines the influence of several corporate governance structures on managers voluntary disclosure decisions in two different regulatory regimes in Malaysia. Corporate governance structures examined are those related to the influence of family ownership, government ownership and independent non-executive directors. An examination of the determinants of VDISC by companies operating in different agency setting and in different regulatory regimes will provide useful information to regulators in promoting more detailed voluntary disclosures. Results of the study reveal that a general emphasis on corporate transparency is insufficient in promoting more detailed disclosure of voluntary information to investors. In contrast, an external governance mechanism through an improved regulation on governance has the potential to improve monitoring effectiveness by government owners and independent non-executive directors in increasing the extent of VDISC. At the same time, it potentially reduces the negative influence of family owners on VDISC. Finally, the mandatory requirements through IFRS compliance further promote the alignment of some corporate governance mechanisms with those of the external regulatory body.