The effect of corporate governance mechanisms on level of risk disclosure: Evidence from Malaysian government linked companies

• Published in: Journal of Management Information and Decision Sciences
• Main Author: Darussamin A.M.; Ali M.M.; Ghani E.K.; Gunardi A.
• Format: Article
• Language: English
• Published: Allied Business Academies 2018
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85063266562&partnerID=40&md5=e8ee9f6e60592a1811431b71fbbb79a1

This study examines the effect of corporate governance mechanisms on level of risk disclosure among the Malaysian Government-Linked Companies (GLCs). Specifically, this study examines the effect of risk management committee, board independence, board financial expertise, multiple directorships and board size on level of risk disclosure among the GLCs. This study utilises the agency theory in linking the corporate governance mechanisms and level of risk disclosure. Content analysis on the 2014 annual reports involving 36 GLCs companies was adopted. This study shows that multiple directorships and board size influence the level of risk disclosure among the GLCs. However, this study shows that risk management committee, board independence and board expertise do not influence the level of risk disclosure among the GLCs. Contrary to the expectation that board independence and board financial expertise would influence the level of risk disclosure, this study fails to provide such evidence. The findings of this study indicate that the board of directors need to consider appointing board members with multiple directorships and expanding their board size for greater risk disclosure. This study provides evidence on the effect of corporate governance mechanisms on level of risk disclosure among the GLCs. The findings in this study assist the GLCs in strategizing ways to improve their risk disclosure practices, thus improving their transparency and accountability to their stakeholders. © 2019 Journal of Legal.