Far 600

International Business Research

October, 2009

Disclosure Quality on Governance Issues in Annual Reports of Malaysian PLCs

Rusnah Muhamad (Corresponding author) Faculty of Business and Accounting, University of Malaya 50603 Kuala Lumpur, Malaysia Tel: 60-3-7967-3934 E-mail: rusnahm@gmail.com

Suhaily Shahimi Faculty of Business and Accounting, University of Malaya 50603 Kuala Lumpur, Malaysia Tel: 60-3-7967-3905 E-mail:suhaily@um.edu.my

Yazkhiruni Yahya Faculty of Business and Accounting, University of Malaya 50603 Kuala Lumpur, Malaysia Tel: 60-3-7967-3905 E-mail: yazkhiruni@um.edu.my

Nurmazilah Mahzan Faculty of Business and Accounting, University of Malaya 50603 Kuala Lumpur, Malaysia Tel: 60-3-7967-3962 Abstract This paper investigates the disclosure quality of governance issues in annual reports of Malaysian PLCs. In recent years, the issue of corporate governance (CG) has received more attention than it would ordinarily have as a result of a series of corporate failures. Corporate collapses like Enron Corporation (US), Barings Empire (UK) and in Malaysia cases such as Perwaja and Pan Electric Inc. are all rooted in the lack of a proper governance system. As a result, the Finance Committee on Corporate Governance was established in 1998 to undertake a review of the legal and regulatory infrastructure, specifically to evaluate its effectiveness in promoting sound CG standards in Malaysia. Following this development, a few guidelines on CG have been released, particularly addressing the principles and best practices such as the Malaysian Code of Corporate Governance (the Code), the Capital Market Master Plan, and the Financial Sector Master Plan. The main purpose of these guidelines is to strengthen CG standards and practices in Malaysia by focusing on the role and responsibilities of various CG participants, mainly the management, board of directors, audit committee (AC), external and internal auditors. Secondary data is used in this study. A...