The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1321-7348.htm

A longitudinal examination of
intellectual capital disclosures
and corporate governance
attributes in Malaysia

ICD and
corporate
governance
27

Abdifatah Ahmed Haji and Nazli A. Mohd Ghazali

Department of Accounting, International Islamic University Malaysia,
Kuala Lumpur, Malaysia
Abstract
Purpose The purpose of this study is to examine the relationship between intellectual capital
disclosure (ICD) and corporate governance attributes following the revised code on corporate
governance in Malaysia in 2007.
Design/methodology/approach The sample of the present study was drawn from top
companies listed on Bursa Malaysia based on their market capitalization for the years 2008, 2009
and 2010. A self-constructed disclosure index was used to assess the extent and quality of ICDs.
The panel data regression analysis was employed to examine the relationship between ICDs
and corporate governance.
Findings The results revealed that all corporate governance attributes namely board size,
independent directors, board effectiveness and position of the chairman (except family members on the
board) were significant in explaining the extent and quality of ICDs in the expected direction. Director
ownership was found to be consistent in negatively relating to both the extent and quality of ICDs.
Government ownership was marginally significant in determining the extent of ICDs.
Practical implications The findings suggest that the revised corporate governance code has a
positive impact on ICD at least in the case of large Malaysian listed companies. This implies that
regulatory efforts in enhancing corporate governance in Malaysia is starting to prove fruitful in
encouraging companies to be involved in more IC investment and hence disclosure.
Originality/value This paper is one of the few studies which investigate the influence of corporate
governance on ICDs longitudinally in a developing country following revision to the corporate
governance code in Malaysia in 2007.
Keywords Intellectual capital disclosure, Corporate governance, Ownership structure,
Annual reports, Malaysia
Paper type Research paper

1. Introduction
In an era of knowledge-based economy, dissatisfaction over traditional financial
reporting practices including its inability to provide useful information to corporate
stakeholders has been raised (Boesso and Kumar, 2007; Bozzolan et al., 2003). This
has led to a demand for a different type of information (Abeysekera and Guthrie, 2005).
The traditional financial reporting does not specifically take into consideration
the disclosure of intellectual capital (IC) information which represents a significant
percentage of the total value of a company (Guthrie et al., 2006). As a result,
many companies, in an attempt to meet the demands of the stakeholders began to
complement their traditional financial reporting with non-financial information
including IC information (Abeysekera and Guthrie, 2005).
Following this, numerous empirical studies were carried out to investigate
intellectual capital disclosure (ICD) practices (e.g. Guthrie and Petty, 2000; Goh and

Asian Review of Accounting

Vol. 21 No. 1, 2013
pp. 27-52
r Emerald Group Publishing Limited
1321-7348
DOI 10.1108/13217341311316931

ARA
21,1

28

Lim, 2004; Cerbioni and Parbonetti, 2007; Abeysekera, 2010; Yi and Davey, 2010).
The studies reported varying degrees of ICDs over the years, with recent ones showing
increasing trend of ICDs (e.g. Abeysekera, 2008). IC information was also perceived
as useful by both preparers and users of annual reports in the context of an emerging
country (Ousama et al., 2011).
However, little is known about factors influencing ICD practices as most prior
studies were descriptive in nature (e.g. Guthrie and Petty, 2000; Brennan, 2001; Bontis,
2003; Goh and Lim, 2004; Abeysekera, 2008). In those studies which examined factors
influencing ICD, company characteristics such as firm size and industry were mainly
investigated (Bozzolan et al., 2003; Guthrie et al., 2006; Branco et al., 2010). With the
exception of a few studies (e.g. Cerbioni and Parbonetti, 2007; Li et al., 2008; Hidalgo
et al., 2011) the relationship between ICDs, corporate governance, and ownership
structure patterns was scarcely researched in the ICD literature. These studies,
undertaken in Europe established a strong link between governance and ICDs. There is
also a dearth of literature investigating the relationship between ICD and corporate
governance attributes longitudinally.
As these few studies were mainly conducted in the economically developed
countries, empirical evidence on the relationship between ICD and governance
attributes of firms in other contexts (e.g. Asia) was called for (Cerbioni and Parbonetti,
2007). Hence, our main motivation to undertake this study is the scarcity of studies
that examine the relationship between ICDs and corporate governance attributes
in a longitudinal setting in the developing countries. This study aims to examine the
relationship between ICDs and corporate governance attributes following the revised
code on corporate governance in Malaysia because governance restructuring is
believed to result in better IC reporting (Burgman and Roos, 2007). We also attempt to
extend prior ICD research both methodologically employing a panel data analysis
as well as contextually as we seek evidence from a developing country. The research
objectives (RO) of the study are as follows:
RO1. To examine the extent and quality of ICDs in Malaysian listed firms.
RO2. To determine if there is a significant relationship between ICDs and corporate
governance attributes.
In Malaysia, following the 1997/1998 Asian financial crisis the Malaysian Code of
Corporate Governance (MCCG) was introduced in 2000. The MCCG was revised in
2007 to further enhance governance and accountability practices of Malaysian public
listed companies. We argue that if these initiatives and amendments aimed at better
corporate governance practices yield anything, corporate governance attributes should
ideally have an influence over ICD practices. That is because disclosure is regarded as
an important part of good corporate governance (Patel et al., 2002).
Specifically, Keenan and Aggestam (2001) contend that corporate governance and
IC are connected and that governance attributes such as independent directors improve
the monitoring quality of companies toward critical decision about IC investment and
corporate performance. Corporate governance restructuring was also identified as a
determining force over IC information (Burgman and Roos, 2007). Similarly, Li et al.
(2008) suggest that enhanced monitoring capacity may lead to improved ICDs.
Collectively, these arguments imply that corporate governance attributes enhance ICD
practices. We test these arguments in the Malaysian environment following the revised

MCCG (2007) by examining the relationship between ICDs and corporate

governance longitudinally.
Using a disclosures index to assess the extent and quality of ICDs, we found that the
extent of ICDs is significantly related to all corporate governance variables except
family members on the board. In terms of the quality of ICDs, the results reveal a
significant association between all governance attributes except board size and family
members on the board. Regarding the ownership structure patterns, we found director
ownership to have a significant negative impact on both the extent and the quality of
ICDs. Government ownership was marginally significant in determining the extent
of ICDs. Firm size and leverage, as control variables, were also found to be significant
in determining the extent and quality of ICDs. Hence, our results give some support to
the arguments by Keenan and Aggestam (2001) and Burgman and Roos (2007) and are
consistent with the empirical observations by Li et al. (2008).
The remaining parts of the study are organized as follows. Section 2 reviews prior
studies on ICDs and highlights the gap in the literature. Section 3 formulates the
hypotheses of the study while Section 4 details the research methodology. Section 5
presents research findings and analyses. Section 6 concludes the study.
2. Literature review
The literature on ICD is increasingly developing internationally (Guthrie and Petty,
2000; Brennan, 2001; Bozzolan et al., 2003; Bontis, 2003; Goh and Lim, 2004;
Abeysekera and Guthrie, 2005; Guthrie et al., 2006; Cerbioni and Parbonetti, 2007; Li
et al., 2008; Abeysekera, 2010; Yi and Davey, 2010; Hidalgo et al., 2011). Despite the rise
in ICD literature; there is a lack of commonly accepted definition for IC (Abeysekera,
2006; Choong, 2008; Yi and Davey, 2010). Often times, the literature offers opposing
definitions of IC (Choong, 2008). Nevertheless, IC is broadly defined as the difference
between the companys market value and its book value (Ordonez de Pablos,
2003, p. 63).
In addition to the lack of a concise definition, most ICD studies rarely discuss the
theoretical underpinnings of their empirical findings (Abeysekera, 2006; Choong, 2008)
and also lack practical usefulness (Choong, 2008). Nonetheless, a number of theoretical
perspectives had been suggested and employed by previous researchers in interpreting
the variations of ICDs (Guthrie et al., 2004; An et al., 2011). These theoretical
perspectives include the resource dependence theory (Li et al., 2008; Abeysekera, 2010);
political economy theory and legitimacy theory (Abeysekera and Guthrie, 2005);
signalling theory (Bozzolan et al., 2003; Garca-Meca and Martinez, 2005); and agency
theory (Cerbioni and Parbonetti, 2007; Li et al., 2008; Hidalgo et al., 2011).
Agency theory suggests that the use of voluntary IC reporting could reduce the
problem of information asymmetry and could also ease other related agency-principal
conflicts as information on IC would enhance the value of the firm (Singh and Zahn,
2008; An et al., 2011). Stakeholder and legitimacy theories, however, imply that ICDs
would allow companies to establish a favorable long-term image within the broader
community (Guthrie et al., 2004; An et al., 2011). A number of prior studies combined a
number of these theoretical perspectives in explaining the ICD practices (Whiting and
Miller, 2008; Li et al., 2008). Similarly, this study adopts agency and legitimacy theories
in formulating the hypotheses.
Another concern is regarding the categorization of ICD. It appears that the
classification developed by Sveiby (1997) receives a universal acceptance as it has been
utilized by a number of prior studies both in the developed and developing countries

ICD and
corporate
governance
29

ARA
21,1

30

(Guthrie and Petty, 2000; Goh and Lim, 2004; Abeysekera, 2007; Yi and Davey, 2010).
Sveibys (1997) classification falls under three dimensions namely, internal structure,
external structure, and employee competence. The categorization of Sveiby (1997) was
later modified by Guthrie and Petty (2000) into internal capital, external capital, and
human capital. Of late, this classification has been the most commonly used in the ICD
literature (Abeysekera, 2008). According to Guthrie et al. (2004, p. 286):
Internal capital includes the systems, policies, culture and other organisational capabilities
developed to meet market requirements. External capital covers the connections that people
outside the organisation have with it, and human capital includes the know-how, capabilities,
skills, and expertise of the employees.

Another case in point is the fact that ICD studies were mainly undertaken in the
economically developed countries (Abeysekera, 2007), due to perhaps the earlier
transformation of their economy into a knowledge-based one. Only very few studies
were conducted in emerging countries such as South Africa (April et al., 2003), China
(Yi and Davey, 2010), India (Kamath, 2008), Malaysia (e.g. Goh and Lim, 2004; Abdul
Rashid et al., 2012), Sri Lanka (Abeysekera, 2008), Kenya (Abeysekera, 2010), and
Mexico (Hidalgo et al., 2011).
The ICD literature in general also offers a dearth of studies that looked at ICD
longitudinally (Abeysekera, 2008). Additionally, studies which looked at the trend of
ICDs (e.g. Abeysekera, 2008; Branco et al., 2010) were mainly descriptive in nature
and did not examine the determinants of ICDs with the exception of few studies (e.g.
Cerbioni and Parbonetti, 2007; Hidalgo et al., 2011; Abdul Rashid et al., 2012). Li et al.
(2008) observed that the literature on the determinants of ICD is limited and
inconclusive. The majority of the few longitudinal studies were also conducted in the
developed countries.
More so is the scarcity of studies in ICDs literature that adopt a panel data
analysis approach in investigating factors influencing the extent of ICDs (Cerbioni and
Parbonetti, 2007). Abeysekera (2006) has, in a review study, raised concerns over the
methodological side of the current ICD literature. Albeit the author underlines
the absence of a mixed method studies in the ICD literature, another side of the
methodological concern of the ICD literature is the scarcity of variety of data analyses
approaches on the determinants of the ICDs. For example, Abdul Rashid et al. (2012)
used multiple regression analysis in their study of ICDs in Malaysia.
Cerbioni and Parbonetti (2007) examined the relationship between ICDs of a sample
of 54 European biotechnology firms and corporate governance attributes. Using a
panel data analysis, the results show that corporate governance variables strongly
influence ICDs. Li et al. (2008) also investigated the influence of corporate governance
attributes on ICDs for a sample of 100 listed firms in the UK. Their results indicated
that there is a significant association between ICDs and governance attributes except
role duality. In the context of the developing countries, Abeysekera (2010) examines the
influence of board size on the subcategories of ICDs for a sample of 52 Kenyan listed
firms. The study found that companies with larger board size disclose more tactical
internal capital and more strategic human capital disclosures. In addition, Hidalgo
et al. (2011) investigate the relationship between the extent of ICDs and a number of
corporate governance and ownership structure attributes in Mexico. Based on a
sample of 100 Mexican listed companies, the results show that only board size has a
positive significant association with the extent of ICDs in Mexico. The results also
show that institutional ownership negatively relates with extent of ICDs.

In Malaysia, a number of studies examined ICDs practices (e.g. Goh and Lim, 2004;
Yau et al., 2009; Huang et al., 2010; Warn and Ratnam, 2010; Taliyang and Jusop, 2011;
See and Abdul Rashid, 2011; Taliyang et al., 2011; Yusoff and Lim, 2011; Abdul Rashid
et al., 2012). Of particular relevance to the present study is the recent works undertaken
by Taliyang and Jusop (2011) and Abdul Rashid et al. (2012). Taliyang and Jusop (2011)
sought the relationship between the extent of ICDs and four elements of corporate
governance (i.e. board composition, role duality, size of audit committee, and audit
committee meetings). Based on a randomly selected sample of 150 listed companies on
Bursa Malaysia in the year 2009, the study revealed that only audit committee
meetings have a significant relationship with ICDs. In addition, Abdul Rashid et al.
(2012) examined factors influencing the extent of ICDs of initial public offerings (IPO)
prospectus in Malaysia. Using a sample of 130 firms drawn from two sectors
(technology and industrial sectors), the study found that board size and board
independence significantly related to ICDs of IPO firms in Malaysia. None of
the studies in Malaysia, however, provided a longitudinal assessment toward the
relationship between ICDs and corporate governance following the revised code
on corporate governance in 2007.
The preceding review of the literature shows that there is a growing number of
studies linking corporate governance and ICDs. As suggested by Keenan and
Aggestam (2001) corporate governance attributes influence IC investment and change
in corporate governance affects IC information (Burgman and Roos, 2007). However,
little research has been conducted to examine the association between ICDs and
corporate governance attributes following changes in the governance structure. Hence,
this study aims to provide an empirical investigation on the relationship between ICD
and corporate governance elements following the revised MCCG (2007) in Malaysia.
3. Hypotheses development
In this section, we discuss relevant theories and related prior studies in formulating the
research hypotheses. The study develops eight hypotheses of which five represent
corporate governance attributes while the remaining three hypotheses relate to
ownership structure patterns.
3.1 Corporate governance attributes
Corporate governance is defined as the manner in which companies are controlled and
in which those responsible for the direction of companies are accountable to the
stakeholders of these companies (Dahya et al., 1996, p. 71). Corporate governance
attributes also establishes the framework for efficiency and probity, and for firms
transparency and accountability (Abeysekera, 2010, p. 505). In addition, corporate
governance has been widely seen as major drivers of corporate disclosures (Patel et al.,
2002). Li et al. (2008) justify the consideration of governance mechanisms in disclosure
studies stating that disclosures are managed by board of directors and therefore
constituents of the boards become important.
At the advent of the Asian financial crisis, a number of Asian countries including
Malaysia adapted corporate governance codes from the developed countries (e.g. UK)
in an effort to induce better governance practices in their business environment. In
2007, Malaysia revised its code on corporate governance which was first introduced in
2000. These amendments were undertaken to restructure and improve the governance
and accountability of Malaysian companies. However, there are still concerns raised
over the effectiveness of the corporate governance practices in Malaysia (Meng, 2009).

ICD and
corporate
governance
31

ARA
21,1

32

This study examines five corporate governance attributes namely, board size,
independent non-executive directors, position of the chairperson, family members on
the board, and board meetings in an effort to investigate whether the amendments
resulted in better ICD practices. A corporations governance system is created by a
series of interrelated characteristics, all of which are relevant to ensuring sound
governance (Cerbioni and Parbonetti, 2007). Hence, the examination of several
attributes of governance is a preferred issue in the disclosures literature (Li et al., 2008).
3.1.1 Board size. Many studies were conducted to investigate the impact of board
size on various organizational multitudes such as strategic management (Goodstein
et al., 1994); corporate performance (Mak and Kusnadi, 2005; Coles et al., 2008); and
ICDs (Cerbioni and Parbonetti, 2007; Abeysekera, 2010; Hidalgo et al., 2011; Abdul
Rashid et al., 2012). The extant literature documents both arguments for (e.g. Pfeffer,
1972, 1973; Pierce and Zahra, 1992) and against larger board size (e.g. Lipton
and Lorsh, 1992; Jensen, 1993; Goodstein et al., 1994). It has been argued that larger
boards can considerably reduce board ability to initiate strategic actions (Goodstein
et al., 1994), have coordination problems (Lipton and Lorsh, 1992), and are usually
non-cohesive in decision making due to their dispersed opinions ( Jensen, 1993). These
anti-larger board views were empirically supported by a number of prior studies
mainly in the corporate performance literature (e.g. Mak and Kusnadi, 2005).
However, the arguments for larger boards, which mainly originate from the resource
dependence theory (Pfeffer, 1972, 1973), emphasize that larger boards host an increased
pool of expertise and offer a substantial variety of perspectives for decision making
(Lipton and Lorsh, 1992). Larger boards also offer increased monitoring capacity in
handling organizational activities. Similarly, more directors in the board might be able
to compensate the individual deficiencies in skills through their collective decision
making (Abeysekera, 2010). A number of empirical studies documented results in line
with the resource dependence theory as they found larger boards are associated with
better organizational performance (Dalton and Dalton, 2005; Belkhir, 2009).
A number of studies examined the association between board size and ICD (e.g.
Cerbioni and Parbonetti, 2007; Abeysekera, 2010; Hidalgo et al., 2011; Abdul Rashid
et al., 2012). Cerbioni and Parbonetti (2007) documented a negative relationship
between board size and the overall ICDs but found positive association between board
size and two categories of the ICDs. In addition, Abeysekera (2010) and Hidalgo et al.
(2011) both found a positive association between board size and tactical internal capital
and strategic human capital disclosures. In the Malaysian context, Abdul Rashid et al.
(2012) observed a significant positive association between ICDs and board size of IPO
prospectus firms in Malaysia. Consistent with the resource dependence theory, we
expect a positive association between ICDs and board size. Hence, the following
hypothesis is formulated in the alternative form:
H1. There is a positive relationship between ICDs and board size.
3.1.2 Independent non-executive directors. The boards of directors are collectively seen
as an internal unit whose main objective is to protect the interests of the owners (Li et
al., 2008). Independent directors, in particular, are intended to have a leading role in
ensuring that the interests of the shareholders are well protected (Fama, 1980). The
outside directors are also supposed to monitor the opportunistic behavior associated
with the insiders (Williams et al., 2006). From a disclosure perspective, independent
directors are expected to put pressure on companies to engage in additional disclosures

(Haniffa and Cooke, 2005). More specifically, Li et al. (2008, p. 139) contend that the
wider expertise and experience of non-executive directors on the board will encourage
management to take a disclosure position beyond a ritualistic, uncritical adherence
to prescribed norms, to a more proactive position reflecting the value relevance of
intellectual capital to stakeholders.
The literature, on the other hand, offers criticisms over the independent directors
role in enhancing organizational performance and transparency. The concerns over the
outside directors often refer to whether they are actually independent. There have been
questions on whether independent directors in Malaysia are really independent (Mohd
Ghazali and Weetman, 2006; Meng, 2009). This concern has also been raised by studies
in other countries (Li et al., 2008).
Due to perhaps the lack of real independence of independent directors, empirical
research on the association between independent directors and ICDs is inconclusive.
For instance, Cerbioni and Parbonetti (2007) and Li et al. (2008) both found a significant
positive relationship between independent directors and ICDs in Europe, whereas
Abdul Rashid et al. (2012) documented a negative relationship between ICD and
independent directors of IPO firms in Malaysia. In addition, Hidalgo et al. (2011)
and Taliyang and Jusop (2011) showed insignificant association between ICDs and
board independence in Mexico and Malaysia, respectively. The revised code of
corporate governance is expected to serve as a wake-up call for the outside directors in
Malaysia in discharging their role effectively. This study therefore expects a positive
association between ICD and independent directors following the revised code of
corporate governance in Malaysia[1]:
H2. There is a positive association between ICDs and the proportion of independent
non-executive directors.
3.1.3 Family members on the board. The presence of family members on corporate
boards is a traditional feature in the Malaysian business environment (Claessens
et al., 2000; Mohd Ghazali and Weetman, 2006) and other Asian countries
(Ho and Wong, 2001). It is contended that such family presence in board of
directors could have an influence on disclosure practices (Haniffa and Cooke, 2002).
Companies where there are a higher percentage of family members in the board are
said to have concentrated ownership, hence, due to the lower degree of conflict of
interests, the need to disclose additional information may be less (Mohd Ghazali
and Weetman, 2006).
There are a number of empirical studies that examined the association between
voluntary disclosures and family members on the board (Ho and Wong, 2001; Haniffa
and Cooke, 2002; Mohd Ghazali and Weetman, 2006). The findings of the studies were
consistent as they all reported a significant negative relationship between the extent of
voluntary disclosures and family members on the board. This suggests that companies
with higher percentage of family members on the board would provide less voluntary
information. However, no prior study to date specifically examined the association
between family members on the board and ICDs. This study, hence, extends prior
research in investigating the relationship between the two variables. The following
hypothesis is developed in the alternative form:
H3. There is a negative relationship between ICDs and family members on the
board.

ICD and
corporate
governance
33

ARA
21,1

34

3.1.4 Board meetings. Agency theory implies that although the primary objective of the
agents (managers) is to maximize their individual interest, the managers would also act
in a manner that they believe would please the principals (shareholders). One way of
establishing a sound relationship with the principals is to show the commitment of the
board members through frequent and timely meetings that address the organizational
matters. The literature documents arguments supportive for frequent board meetings
and vice versa (e.g. Vafeas, 1999; Khanchei, 2007). Frequent board meetings might be a
testament of highly committed and active board members (Khanchei, 2007). This
provides door for increased monitoring capacity and immediate resolution for arising
organizational matters. However, increased board meetings might potentially
introduce additional organizational costs and could cause more conflicts among the
directors. Shivdasani and Zenner (2004) suggest that board meetings should be
increased only when there is a need for additional supervision.
Prior empirical disclosure studies did not consider the association between board
meetings and voluntary disclosures. However, several studies examined the
relationship between the extent of ICDs and the frequency of subcommittees
meetings such as audit committee (Li et al., 2008; Taliyang and Jusop, 2011). Both
studies reported a significant positive association between the frequency of the
subcommittee meetings and the extent of ICDs in the UK and Malaysia, respectively.
Building on this line of literature, our expectation is that the frequency of board
meetings, an indication of an active and committed board, would have a positive
influence on the level of ICD practices of Malaysian listed companies. Hence, the
following alternative hypothesis is developed:
H4. There is a positive relationship between ICDs and board meetings.
3.1.5 Position of the chairman. It is a common practice in Malaysia for companies to be
chaired by either an executive or independent non-executive chairperson. Agency
theory suggests that an independent chairperson can play a better role in influencing
and endorsing disclosure decisions in fulfilling their independent monitoring role.
The impact of the position of the chairman as independent or non-independent has
been considered in prior disclosure studies (e.g. Haniffa and Cooke, 2002; Mohd Ghazali
and Weetman, 2006). While independent non-executive chairperson was found to relate
to better corporate performance (Donaldson and Davis, 1991), the association is less
clear in disclosure studies. Haniffa and Cooke (2002) contend that independent
chairman would encourage additional voluntary disclosures. However, their empirical
results show that there is a negative association between the extent of voluntary
disclosures and the presence of independent chairman. Mohd Ghazali and Weetman
(2006), however, found no relationship. The relationship between ICDs and the
presence of an independent chairman is not yet researched. Given the mixed findings of
prior disclosure studies, this study develops the following hypothesis:
H5. There is a relationship between ICDs and the presence of independent
chairman on the board.
3.2 Ownership structure patterns
3.2.1 Director ownership. Owner-managed companies are another common feature
in the Malaysian corporate environment. The percentage of shares owned by the
executive directors is a measure used to show the extent of director ownership

(Eng and Mak, 2003). Agency theory implies that higher managerial ownership results
in lower agency-principal conflict because these managers would have more incentives
to maximize job performance. Hence, outside shareholders may not need additional
monitoring of managers behaviors. Owner-managed companies are also usually
closely held and thus may have less incentive to provide more voluntary disclosures
(Mohd Ghazali, 2007). This is because the owners could obtain the information through
informal channels (Branco et al., 2010).
Consistent with the above rationale, prior disclosure studies found a significant
negative association between the level of voluntary disclosures and director
ownership (e.g. Eng and Mak, 2003; Mohd Ghazali and Weetman, 2006). We aim to
extend this line of research into the ICD theme by examining the relationship
between ICDs and director ownership. Based on the agency theory rationale and the
empirical results of prior disclosure studies, we expect a negative association between
ICDs and director ownership. Hence, the following hypothesis is developed in the
alternative form:
H6. There is a negative relationship between ICDs and director ownership.
3.2.2 Government ownership. In Malaysia, government ownership is evidenced in
government-linked companies (GLCs). These companies in which the Malaysian
government has direct controlling interests, similar to other types of companies have a
primary commercial objective. GLCs in Malaysia are involved in the finance, media and
communications, utilities, information technology, and transportation industries and
account for approximately 54 percent of the market capitalization of the Malaysian
Bourse[2]. The government is accountable to the public at large and as a result may
feel additional pressure to encourage investments on IC such as human capital
development. This expectation is in line with the governments aim to transform
the country into a knowledge-based economy which is laid in the Third Outline
Perspective Plan (OPP3, 2001)[3]. Thus, it may be expected that those companies
in which the government is a substantial shareholder have higher investments on
IC. This in turn may lead to more ICDs as such disclosures may legitimize the
governments activities.
Empirical studies had shown that governmental ownership positively relates to
voluntary disclosures in Malaysia (e.g. Mohd Ghazali, 2007; Amran and Devi, 2008).
Yau et al. (2009) compared the ICDs in GLCs and non-GLCs. The study found that GLCs
provided higher ICDs compared to non-GLCs. Thus, it may be expected that companies
in which the government is a substantial shareholder would disclose more IC
information. Hence, we develop the following alternative hypothesis:
H7. There is a positive association between ICDs and government ownership.
3.2.3 Institutional ownership. The Malaysian capital market has witnessed an
increase in the investments made by institutional shareholders (Ghosh, 2006).
It has also been observed that a significant proportion of the outstanding shares (51.03
percent) of the largest ten companies in Malaysia are owned by institutional
investors (Saleh et al., 2010). These institutional investors, according to Saleh et al.
(2010), are dominated by large institutions that have links to the Malaysian
government such as the Employees Provident Fund, Lembaga Tabung Haji, and
Permodalan Nasional Berhad).

ICD and
corporate
governance
35

ARA
21,1

36

Such institutional owners are said to play a significant role over the corporate
governance and disclosure practices as they tend to use these as tools to monitor the
agents (David and Kochhar, 1996; Saleh et al., 2010). Specifically, additional disclosures
are used as a mechanism to monitor firms by institutional shareholders (Kim and
Nofsinger, 2004). Disclosure of material information including investments on IC might
also assist institutional investors in making decisions over the performance of the
management. However, Hidalgo et al. (2011) found negative association between
the extent of ICDs and institutional ownership in Mexico.
In Malaysia, institutional ownership was found to have a significant positive
influence over corporate social responsibility disclosure (Saleh et al., 2010). As
institutional investors in Malaysia are dominated by institutions which have strong
link with the Malaysian government, this relationship can be expected as it may
indicate a legitimization process by the institutional investors. Following this, we
expect a positive association between ICDs and institutional investors. Hence, the
following hypothesis is developed in the alternative form:
H8. There is a positive relationship between ICDs and institutional ownership.
3.3 Control variables
Consistent with prior studies (e.g. Cerbioni and Parbonetti, 2007; Li et al., 2008), this
study includes a number of corporate attributes which are company size, profitability,
and leverage as control variables.
The size of a firm had been positively associated with ICD practices (Cerbioni and
Parbonetti, 2007; Li et al., 2008; Hidalgo et al., 2011). Larger companies are more
resourceful, more visible, and are subject to increased demand of information
by outsiders. Hence, this study expects a positive relationship between the level
of ICDs and company size.
The extent of corporate disclosures was also related to firm profitability although
the relationship was less clear. Li et al. (2008) argued that profitable companies could
continuously invest in IC and may thus signal their investments through more ICDs.
Their study found support for this conjecture by documenting a significant positive
relationship between the level of ICDs and profitability. Cerbioni and Parbonetti (2007)
also found a significant positive relationship between ICDs and profitability in a
sample of European biotechnology firms. Hence, we build on prior studies results in
our expectation that a positive association would exist between the level of ICDs and
profitability in Malaysian firms.
Leverage is another variable tested in disclosure studies. Similar to profitability,
prior studies documented both positive as well as negative association between
voluntary disclosure practices and leverage. In the context of ICD, Cerbioni and
Parbonetti (2007) found no association. However, Abdul Rashid et al. (2012)
documented a significant positive association between leverage and the ICDs of IPO
firms. Highly leveraged companies might provide additional disclosures in order to
reduce agency conflicts between debt holders and shareholders. This rationale has
been supported by prior disclosure studies (e.g. Prencipe, 2004). We expect a positive
relationship between leverage and the level of ICDs in the Malaysian context.
4. Methodology
4.1 Sample selection procedures
The sample of the present study was drawn from top companies listed on the
Malaysian Bourse based on their market capitalization for the years 2008, 2009, and 2010.

Larger companies had been chosen for analysis in several prior ICD studies (Guthrie
and Petty, 2000; April et al., 2003; Goh and Lim, 2004; Guthrie et al., 2006; Abeysekera
and Guthrie, 2005; Abeysekera, 2008), because they are likely to possess more
intellectual capital (Guthrie and Petty, 2000, p. 250).
Considering the heavy workload in content analysis especially in a longitudinal
setting, the largest 60 Malaysian companies were chosen based on their market
capitalization. In order to have a sample size large enough to run the appropriate tests
(i.e. panel data analyses) and also manageable for the content analysis task, the study
focussed on the largest 60 companies. The market capitalization data of each year was
obtained from Bloomberg database. This database is considered reliable and has been
the source of several ICD studies (e.g. Abdolmohammadi, 2005). The corporate annual
reports were used as a source of information in assessing the ICDs due to their
advantages over other channels of corporate information.
After taking into consideration some missing data due to the longitudinal nature of
the study, the final sample of this study consists of 51 companies drawn from the
largest 60 companies. Hence, the resulting total annual reports is 153 (i.e. 3 years  51
companies 153 observations). The final sample represents seven sectors of Bursa
Malaysia industrial classification namely: construction, finance, consumer products,
industrial products, plantation, property, and trading and services.
The years 2008-2010 was chosen for two reasons. First, this time frame depicts after
Malaysia revised its code on corporate governance in 2007. The amendment on the
code was made to improve the Malaysian corporate environment amidst concerns of
poor governance practices. Hence, this study examines the relationship between ICD
practices and governance attributes post MCCG (2007) to examine whether the revision
has an impact on ICD information. Second, the period examined in the present study
portray both during the 2007/2008 global financial downturn and soon after the crisis.
Thus, the results of the study might suggest factors that relate to ICDs both in times of
crisis and soon after a crisis period of time.
4.2 Development of ICD instrument
Most ICD studies involve content analysis which is well defined in the ICD literature
(Guthrie and Petty, 2000, Brennan, 2001; Goh and Lim, 2004; Guthrie et al., 2006;
Cerbioni and Parbonetti, 2007; Li et al., 2008; Abeysekera, 2010; Yi and Davey, 2010).
Content analysis involves codifying qualitative and quantitative information into
pre-defined categories in order to derive patterns in the presentation and reporting of
information (Guthrie et al., 2004, p. 287). An important requirement in content
analysis is the development of a list of items that might possibly appear in a company
annual report. As discussed in Literature review, the ICD studies mainly classify
such items into three subcategories namely, internal capital, external capital, and
human capital, a categorization developed by Sveiby (1997).
Following this categorization, a disclosure checklist was developed for the present
study to measure the extent and quality of ICDs. In constructing the ICD checklist,
several steps have been undertaken. First, the disclosure checklists of several prior ICD
studies were referred to as a starting point (Guthrie and Petty, 2000; Bontis, 2003;
Bozzolan et al., 2003; Abeysekera, 2007; Yi and Davey, 2010). Second, the annual
reports of Malaysian companies that won the Most Outstanding Annual Report of the
Year Award[4] were reviewed to draw items deemed to be relevant in the Malaysian
business environment. Thus, the checklist used in the present study is a combination of
both a review of the extant IC literature as well as items retrieved from the annual

ICD and
corporate
governance
37

ARA
21,1

38

reports of Malaysian companies with reporting awards. In addition, the checklist was
developed to suit the Malaysian business environment given that prior studies ICD
instruments were developed in different cultural and economic settings. Devising an
IC checklist to suit the study at hand is in line with previous IC disclosure studies (e.g.
Abeysekera, 2007; Li et al., 2008; Yi and Davey, 2010).
Consistent with Li et al. (2008), one researcher coded a sample of annual reports with
an initial draft of the ICD items which consisted of 44 items. Special consideration for
inclusion was given to items that appeared in at least one of the sample annual reports.
Items that did not appear in the sample annual reports at all were excluded as they
might have lacked relevance in the Malaysian environment. After discussion with the
other researcher, the items were reduced to 40 ICD items of which nine are internal
capital items, 17 are external capital items, and the remaining 14 are human capital
items. The full disclosure index is provided in Appendix.
4.3 Measurement of the dependent variables
Different measures of ICDs were adopted in prior studies. Some studies used a
dichotomous approach (unweighted) where 0 was assigned for non-disclosure and a
value of 1 was denoted for a disclosed item (e.g. Guthrie and Petty, 2000; April et al.,
2003; Goh and Lim, 2004; Li et al., 2008; Abeysekera, 2010). This approach is said to be
more objective as it treats the items with equal importance (Cooke, 1989). However, the
dichotomous method does not consider what is said and how it is said (Guthrie and
Parker, 1990). Alternatively, research in ICDs had also used a weighting approach in
which items disclosed were assigned different values depending on how they were
disclosed (e.g. Guthrie et al., 2006; Abeysekera, 2008; Yi and Davey, 2010). Nonetheless,
the weighting approach can result in bias due to scaling errors (Cooke, 1989;
Abeysekera, 2010). The foregoing discussion suggests that both approaches have
advantages and disadvantages. Hence, in order to host the advantages and tackle the
disadvantages of each one, the current study adopts both approaches in measuring
the ICDs of the sample Malaysian companies. The dichotomous method measures the
extent while the weighting approach captures the quality of the ICDs.
The approach used in scoring the extent of the ICD is a dichotomous procedure
whereby 0 is assigned if the items in the index do not appear in the annual report and
value of 1 if the item is disclosed. The quality of the ICDs is captured in a weighting
approach whereby a four-point scale (0-3) is used. A value of 0 was assigned if the item
did not appear in the annual report, a value of 1 was assigned if the item appear in
narrative or discursive form, a value of 2 was assigned if the items were disclosed in
numerical terms, and the highest score of 3 was denoted if the items were disclosed
monetarily (currency). This approach is consistent with prior studies (e.g. Guthrie et al.,
2006; Abeysekera, 2008).
4.4 Measurement of independent variables
The measurement of the corporate governance as well as the control variables
included in the present study is tabulated in Table I. The table also presents the
definitions of the variables, type, and the source of the data for both the dependent and
independent variables.
4.5 Data analysis
In this study, a panel data regression analysis is employed to identify the relationship
between ICDs and corporate governance and ownership structure attributes.

Type
Dependent
Dependent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Control variable
Control variable
Control variable

Definition

Extent of intellectual capital disclosures

Quality of intellectual capital disclosures

Board size
Independent non-executive directors

Family members on the board

Board meetings
Position of the chairman
Director ownership

Government ownership

Institutional ownership

Company size
Return on equity
Leverage
Error term

Number of items in the checklist disclosed

divided by the maximum possible score (i.e. 40)
Number of items in the checklist (based on the
scale of 0-3) disclosed divided by the maximum
possible score (i.e. 120)
Total number of directors on the board
Proportion of independent directors to total
number of directors
Proportion of family members on the board to
total number of directors
Total number of board meetings
Chairman is independent 1, 0 otherwise
Percentage of shares held by executive and nonindependent directors including their deemed
interests
Government is a substantial (owns 5 percent or
more) shareholder 1, 0 otherwise
Percentage of shares owned by institutional
investors with equity of 5 percent or morea
Total assets
Total equity to net income
Total debt to total assets

Operationalization

Annual reports
Annual reports
Annual reports

Annual reports

Annual reports

Annual reports
Annual reports
Annual reports

Annual reports

Annual reports
Annual reports

Annual reports

Annual reports

Source of data

Notes: aSome institutional investors which actively invest in the capital market include public and union pension funds, mutual fund, investment bankers,
insurance companies, and employee provident fund (Saleh et al., 2010). So institutions holding a substantial shares were captured (i.e. own more than 5 percent)
because they can be expected to have an influence

SIZE
ROE
LEV
e

IOWN

GOVOWN

BMEETING
POSCM
DIROWN

FMB

BSIZE
INDs

QICD

EICD

Acronym

ICD and
corporate
governance
39

Table I.
Measurement of
dependent and
independent variables

ARA
21,1

40

Panel data analysis involves the examination of a particular subject within multiple
sites periodically over a defined time frame (Yaffe, 2006). Panel data analysis, a highly
used method in longitudinal and cross-sectional studies, is said to have advantages
over other methods as it allows for more data points (Kyereboah-Coleman, 2007). The
panel ordinary least squares (PLS) estimation, the random effects (RE), and the fixed
effects (FE) are commonly used methods of panel data analysis (Lee, 2009). Several
tests are carried out in deciding the appropriate method for the data of this study.
The panel least square is commonly used when the data analyzed is normally
distributed and that there are no heteroskedasticity and autocorrelation problems
(Gujarati and Porter, 2009). Should there be normality distribution and
heteroskedasticity concerns, the generalized least squares method of either the FE or
RE models are employed depending on the outcome of the Hausman specification test.
However, if only heteroskedasticity problems arise, then the White heteroskedasticity
corrected standard model is used. In addressing the issues above, the present study
carried out several tests in deciding which method of panel data analysis is appropriate
using EViews software (version 7).
First, the normality distribution of the data was checked. Results showed that
the data are normally distributed as indicated by the skewness and kurtosis values.
The Jarque-Bera test, a test which shows any departure from normality (Lee, 2009),
was also conducted to further ascertain whether the data meets the normality
distribution. The results showed that the Jarque-Bera[5] is not statistically significant
giving further support that the data are normally distributed.
The existence of heteroskedasticity problems was further checked using the
White test and the results indicated the presence of some heteroskedasticity concerns.
These tests suggest that the PLS can be used but because of the heteroskedasticity
concerns, a modified PLS model referred to as White heteroskedasticity corrected
standard should be employed (Gujarati and Porter, 2009). Thus, the results of the
study are presented using the modified PLS based on the White heteroskedasticity
corrected standard.
Correlation analyses were further conducted to identify the potential existence of
multi-collinearity problems among the independent variables. The results tabulated
in Table II indicate that the highest correlation coefficients among the independent
variables are below cut-off point figure of 0.7 (Tabachnick and Fidell, 2001). Hence, the
results imply that multi-collinearity is not a problem in the present study.
4.5.1 The panel regression model. For the purpose of testing the relationship
between ICDs and corporate governance attributes, the following panel regression
models were formulated:
EICDit =QICDit b0 b1 BSIZEit b2 INDit b3 FMBit
b4 BMEETINGit b5 POSCMit b6 DIROWNit
b7 GOVOWNit b8 IOWNit b9 SIZEit
b10 ROEit b11 LEVit eit
The definition and operationalization of each variable is given in Table I.
5. Research findings and analysis
5.1 Summary statistics
The descriptive statistics presented in Table III show that the extent of ICDs for the
three-year period examined ranges from 5 to 87.5 percent with an average score of

Extent Quality BSIZE INDs POSCM FMB BMEETING DIROWN GOVOWN IOWN SIZE ROE
Extent
1.000
Quality
0.969 1.000
BSIZE
0.152 0.097 1.000
INDs
0.294 0.289 0.284 1.000
POSCM
0.137 0.165 0.094 0.059
FMB
0.277 0.248 0.289 0.328
BMEETING 0.561 0.534 0.216 0.356
DIROWN 0.398 0.355 0.059 0.138
GOVOWN
0.213 0.185 0.252 0.05
IOWN
0.386 0.339 0.051 0.163
SIZE
0.491 0.489 0.135 0.275
ROE
0.007 0.010 0.197 0.12
LEV
0.358 0.358 0.038 0.241

1.000
0.032 1.000
0.137 0.021
0.066 0.613
0.219 0.047
0.247 0.32
0.130 0.001
0.214 0.05
0.046 0.06

41
1.000
0.183
0.256
0.354
0.674
0.123
0.463

1.000
0.098
0.587
0.040
0.079
0.055

1.000
0.337
1.000
0.178
0.181 1.000
0.348 0.19 0.01 1.000
0.037
0.11 0.10 0.13

Notes: BSIZE, Board size; INDs, independent non-executive directors; POSCM, position of the chairman; FMB,
family members on the board; BMEETING, board meetings; DIROWN, director ownership; GOVOWN, government
ownership; IOWN, institutional ownership; SIZE, company size; ROE, return on equity; LEV, leverage

Variables
Extent (%)
Quality (%)
BSIZE
INDs (%)
POSCM
FMB (%)
BMEETING
DIROWN
(%)
GOVOWN
IOWN (%)
SIZE (RM)
ROE (%)
LEV (%)

Mean

Median

ICD and
corporate
governance

Maximum

Minimum

Table II.
Correlation analysis

Standard deviation

44.25
21.16
9.03
45.00
31.00
16.00
7.5

45
20.83
9.00
43.00
0.00
0.00
6.00

87.50
50.00
15.00
71.00
1.00
77.00
24.00

5.00
3.33
5.00
9.00
0.00
0.00
4.00

18.45
9.04
2.19
11.00
47.00
22.00
3.87

14.55
79.00
38.11
27,100 mil
19.00
54.00

0.25
1.00
34.53
8,830 mil
14.00
54.00

64.56
1.00
92.14
337,000 mil
1.99
95.00

0.00
0.00
0.00
593 mil
66.00
3.00

21.01
40.00
27.42
53,100 mil
28.00
22.00

Notes: BSIZE, Board size; INDs, independent non-executive directors; POSCM, position of the
chairman; FMB, family members on the board; BMEETING, board meetings; DIROWN, director
ownership; GOVOWN, government ownership; IOWN, institutional ownership; SIZE, company size;
ROE, return on equity; LEV, leverage; mil, million

44.25 percent and standard deviation of 18.45 percent. The quality of ICDs, on the other
hand, indicates that the scores range from 3.33 to 50 percent with a mean score of 21.16
percent and standard deviation of 9.04 percent. From the foregoing finding, two
observations can be made. First, the results show that the ICDs have high variations
even among the largest companies listed on the Malaysian Bourse. Second, the results
imply that the ICDs are mainly in discursive form, as opposed to numerical or
monetary terms, as indicated by the higher scores in the extent of ICDs (44.25 percent)
and the lower scores of the quality of the ICDs (21.16 percent) consistent with prior

Table III.
Summary statistics (total
observations 153)

ARA
21,1

42

studies both in Malaysia (e.g. Goh and Lim, 2004) and outside Malaysia (e.g. Guthrie
and Petty, 2000; Li et al., 2008).
The descriptive statistics for the independent variables, also shown in Table III,
show that board size ranges from 5 to 15 with a mean score of about nine members
of the three-year period investigated. The results also show that independent directors
on average constituted 45 percent of the sample Malaysian companies board of
directors. Meanwhile, 31 percent of the sample companies had independent chairman.
The board meetings ranged from four to 24 meetings with a mean figure of 7.5. The
presence of substantial government shareholding (79 percent of the firms)
and institutional shareholding (mean: 38.11 percent) is also apparent in the largest
companies in Malaysia.
5.2 Panel regression results
The panel data regression analyses using the modified OLS model are presented
in Tables IV and Table V. The first model (Table IV) presents results for the
factors influencing the extent of ICDs while the second model (Table V) shows factors
influencing the quality of ICDs. The first model shows an adjusted R2 of 46 percent
while the second model shows an adjusted R2 of 40.32 percent.
The results show that all corporate governance attributes except family
members on the board (FMB) are statistically significant in explaining the extent of
ICDs. Board size (BSIZE), independent non-executive directors (INDs), and board
meetings (BMEETING) are highly significant (1 percent level) and positively associate
with the extent of ICDs. Position of the chairman (POSCM) is significant at the 5
percent level and shows a negative relationship with the extent of ICDs. In terms of
ownership structure variables, director ownership (DIROWN) is statistically

Table IV.
Panel least square using
white cross-section
standard errors extent
of ICDs

Variable

Coefficient

Standard error

t-statistic

Probability

BSIZE
INDs
FMB
BMEETING
POSCM
DIROWN
GOVOWN
IOWN
SIZE
ROE
LEV
C
R2
Adjusted R2
F-statistic
Probability (F-statistic)

1.378605
19.84084
10.17377
1.052002
3.902536
0.215133
3.162087
0.026147
6.68E-11
7.338018
10.32205
8.641950
0.499084
0.460005
12.77128
0.000000

0.417145
5.084723
6.688987
0.042860
1.735426
0.031742
1.810526
0.034717
2.30E-11
3.770776
3.513766
6.101287

3.304860
3.902050
1.520973
24.54494
2.248749
6.777519
1.746501
0.753142
2.908652
1.946023
2.937602
1.416414

0.0012***
0.0001***
0.1305
0.0000***
0.0261**
0.0000***
0.0829*
0.4526
0.0042***
0.0536*
0.0039***
0.1589

Notes: BSIZE, Board size; INDs, independent non-executive directors; POSCM, position of the
chairman; FMB, family members on the board; BMEETING, board meetings; DIROWN, director
ownership; GOVOWN, government ownership; IOWN, institutional ownership; SIZE, company size;
ROE, return on equity; LEV, leverage; sample: 2008-2010; periods included: three; cross-sections
included: 51; total panel (balanced) observations: 153; ***, **, *significant at 1, 5, and 10 percent level,
respectively

Variable

Coefficient

Standard error

t-statistic

Probability

BSIZE
INDs
FMB
BMEETING
POSCM
DIROWN
GOVOWN
IOWN
SIZE
ROE
LEV
C
R2
Adjusted R2
F-statistic
Probability (F-statistic)

0.365602
9.064402
3.254318
0.478255
2.847028
0.114889
1.295883
0.006745
3.58E-11
2.949083
5.598510
7.925782
0.446456
0.403272
10.33841
0.000000

0.288047
4.316800
3.156040
0.020671
0.533114
0.011444
0.839977
0.015860
1.76E-11
2.433825
2.606800
4.698920

1.269246
2.099797
1.031139
23.13658
5.340370
10.03953
1.542760
0.425257
2.040912
1.211707
2.147656
1.686724

0.2064
0.0375**
0.3042
0.0000***
0.0000***
0.0000***
0.1251
0.6713
0.0431**
0.2277
0.0335**
0.0939

Notes: BSIZE, Board size; INDs, independent non-executive directors; POSCM, position of the
chairman; FMB, family members on the board; BMEETING, board meetings; DIROWN, director
ownership; GOVOWN, government ownership; IOWN, institutional ownership; SIZE, company size;
ROE, return on equity; LEV, leverage; sample: 2008-2010; periods included: three; cross-sections
included: 51; total panel (balanced) observations: 153; ***, **significant at 1 and 5 percent level,
respectively

significant at the 1 percent level and negatively relates to the extent of ICDs, while
government ownership (GOVOWN) is positive and marginally significant at the 10
percent level. However, institutional ownership (IOWN) is insignificant. Firm size
(SIZE) and leverage (LEV), as control[6] variables, are highly significant at the 1
percent level, with profitability (ROE) showing a marginal significance and a positive
association with the extent of ICDs.
The second model in Table V presents results on factors influencing the quality of
ICDs. Results in the second model show that IND, FMB, and BMEETING remain to be
statistically significant in explaining the quality of ICDs. However, contrary to the first
model, BSIZE becomes insignificant in relation to the quality of ICDs. In terms of
ownership structure patterns, DIROWN is still significant at the 1 percent level while
GOVOWN becomes insignificant in the second model. SIZE and LEV are significant
at the 5 percent level. However, ROE does not maintain its marginal significance
as in the first model.
5.3 Summary of hypotheses
Based on the resource dependence theory, a positive association between board size
and ICD was expected. The results showed that board size is significant at the
1 percent level and positively related to the extent of ICD. This finding is consistent
with prior studies by Abeysekera (2010) and Abdul Rashid et al. (2012). However, this
significance did not hold for the quality of ICDs albeit the positive sign remained intact
with both the extent and quality of ICDs. It would appear that board size significantly
influenced the presence/absence of ICDs but not significant in explaining how the items
were disclosed. Hence, we provide a partial support for H1. Independent non-executive
directors are shown to have a significant positive association with both the extent

ICD and
corporate
governance
43

Table V.
Panel least square using
white cross-section
standard errors quality
of ICDs

ARA
21,1

44

(at the 1 percent level) and quality (at the 5 percent level) of ICDs. Hence, the results
support our H2. The results are also consistent with prior ICD studies (e.g. Cerbioni
and Parbonetti, 2007; Li et al., 2008) but is inconsistent with (Abdul Rashid et al.,
2012)[7]. Family members on the board did not show a significant association with both
the extent and quality of ICDs, hence the results do not provide support to H3. Board
meetings were found to have a significant positive association with both the extent and
quality (at the 1 percent significance level) of ICDs in Malaysia. The findings thus
provide support to H4 that there is a positive relationship between ICDs and board
meetings. The positive association between ICD and board meetings implies that more
frequent board meetings (a sign of active board members) could lead to greater ICDs.
Independent chairperson was found to have a significant negative relationship with
both the extent (at the 5 percent level) and quality (at the 1 percent level) of ICDs. This
finding is consistent with Haniffa and Cooke (2002) who documented a negative
association between independent chairperson and voluntary disclosures in Malaysia.
The observed negative relationship between ICDs and independent chairperson
contradicts with the agency theorys conjecture that the presence of an independent
non-executive chairperson in the board would positively influence disclosure decisions.
In contrast the results appear to suggest that independent chairperson is a costefficient substitute for ICDs.
In terms of ownership structure patterns, the results show a significant negative
association between director ownership and the two measures (at the 1 percent level)
of ICDs. Hence, we provide support to our H6. Government ownership was found to be
marginally positive (at the 10 percent level) in explaining the extent of ICDs, but is
insignificant in determining the quality of ICDs. Thus, the results provide a partial
support to H7. Institutional ownership showed an insignificant association with
both the extent and quality of ICD. Therefore, H8 is not supported. Table VI shows a
summary of the research hypotheses.
6. Conclusions
The first objective of this study is to show the current status of the ICDs in the
Malaysian context. Measuring the extent as well as the quality of ICDs, the present
study finds that the extent (quantity) of ICDs are relatively high (mean of 44.25 percent)
in comparison with the quality of ICDs (21.16 percent). These findings echo prior

Significance level
Independent variables Expected sign Observed sign Extent (%) Quality (%)
BSIZE
INDs
FMB
BMEETING
POSCM
DIROWN
GOVOWN
IOWN
Table VI.
Summary of research
hypotheses

7





1
1

1
5
1
10



5

1
1
1



Results
Partially supported
Supported
Not supported
Supported
Supported
Supported
Partially supported
Not supported

Notes: BSIZE, Board size; INDs, independent non-executive directors; POSCM, position of the
chairman; FMB, family members on the board; BMEETING, board meetings; DIROWN, director
ownership; GOVOWN, government ownership; IOWN, institutional ownership

studies which found ICDs in annual reports were mainly in declarative form rather
than in numerical or monetary terms (e.g. Goh and Lim, 2004; Guthrie et al., 2006;
Li et al., 2008). The study also observes that there is a high variation of both the extent
and quality of ICDs even among the largest companies in Malaysia in the period
examined. This could be due to the absence of a detailed ICD guideline in Malaysia.
The second objective of the study is to examine the relationship between ICDs and
corporate governance and ownership structure controlling for some corporate
characteristics. The results indicate that, in overall, governance attributes have an
impact on ICD practices of Malaysian public listed companies. The results revealed
that all corporate governance attributes except family members on the board were
significant in explaining the extent and quality of ICDs. Director ownership was found
to be consistent in negatively relating to both the extent and the quality of ICDs.
Government ownership was marginally significant in determining the extent of ICDs.
Company size and leverage, as control variables, were also consistent in relating
positively to the two measures of ICDs while profitability was only marginally related
to the extent of ICDs.
Studies undertaken in the European countries documented that governance
variables had a significant influence over ICDs practices (Cerbioni and Parbonetti,
2007; Li et al., 2008). The present study draws further evidence from an Asian context
to support prior studies that established a strong relationship between corporate
governance attributes and IC reporting. Prior studies in Malaysia have shown minimal
impact of corporate governance variables on voluntary disclosures (Mohd Ghazali
and Weetman, 2006) and particularly on ICDs (Abdul Rashid et al., 2012). These
studies, however, examined the disclosure practices before the revised code in
Malaysia. Hence, it may be concluded that the improved governance influence
over ICDs documented in the present study is partly attributable to the revised code on
corporate governance in Malaysia.
The study contributes to the body of ICDs research in several ways. First, only a few
studies examined the relationship between ICD and corporate governance and
ownership structure patterns (e.g. Cerbioni and Parbonetti, 2007; Li et al., 2008; Hidalgo
et al., 2011; Abdul Rashid et al., 2012) and these studies were mainly undertaken in
the developed countries. This has led prior studies to call for investigation of the
relationship between ICD and governance in Asia (Cerbioni and Parbonetti, 2007) to
validate whether the association between ICD and governance attributes found in
Europe exists in other contexts such as Asia. Thus, the findings of the present study
validate prior empirical findings in the Asian context and support the argument by
Keenan and Aggestam (2001) that corporate governance and IC are connected. Second,
the findings of this study provide support to Burgman and Roos (2007) contention
that corporate governance development (restructuring) is one of the determining forces
of IC information. Finally, only few ICD studies utilized a panel data analysis in
examining factors affecting the level of ICDs (e.g. Cerbioni and Parbonetti, 2007).
Hence, this study might provide a methodological base for comparison with future ICD
studies that may wish to utilize a panel data analysis approach in investigating the
determinants of ICDs particularly in the emerging countries.
Nonetheless, the study is subject to a number of limitations that may pioneer
future research. First, the study only sampled the largest 51 companies in Malaysia.
Albeit this might be considered appropriate, a mixture of large and small companies
with larger sample size might have given a more comprehensive view of the
association between ICDs and governance attributes. Hence, future researchers may

ICD and
corporate
governance
45

ARA
21,1

46

want to employ a larger sample size and combine different sizes of companies in
examining the ICD practices in a longitudinal setting. Second, the period examined
(2008-2010) may be considered too close to the amendment of the Malaysian code of
corporate governance. Thus, future studies may wish to examine extended time frames
such as 2010-2012 in validating the influence of the revised corporate governance code
on ICDs in the Malaysian environment.
Notes
1. Abdul Rashid et al. (2012) examined Malaysian technology and industrial product sectors
which went through IPO between 2004 and 2008. Our sample focussed on 60 largest
Malaysian companies for the years 2008-2010, a period after the revised code on corporate
governance. Hence, a positive relationship between ICDs and independent directors is
expected in the present study.
2. Source: www.khazanah.com.my (accessed on January 21, 2012).
3. OPP3 is part of the strategic plan of the Malaysian government in order to achieve a fully
developed nation by 2020. Source: www.epu.jpm.my (accessed on January 19, 2012).
4. Three companies won the Most Outstanding Annual Report of the Year Award in 2009.
These companies are Telekom Malaysia Berhad, Kulim (Malaysia) Berhad, and Public
Bank Berhad. They are part of the sample companies. The award which recognizes
excellence in corporate reporting is a collaborative effort of the Malaysian Bourse Berhad,
the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public
Accountants. Source: www.micpa.com.my/micpanew/explore.asp?lk nacra-history
(accessed on January 21, 2012).
5. The Jarque-Bera test results showed a probability value of 0.7277, that is, p-value40.05.
6. The industry variable was also controlled in an unreported model. IC intensive sectors were
denoted as 1 and 0 for non-IC intensive sectors. The results were similar. However, the
industry variable was not statistically significant in explaining the ICDs over the three-year
period.
7. The difference in findings could be partly attributable to sample selection. The model in
Abdul Rashid et al. (2012) which found independent directors to be significant and
negatively related with ICDs focussed on IPO companies in the industrial product sector.
References
Abdolmohammadi, M.J. (2005), Intellectual capital disclosure and market capitalization,
Journal of Intellectual Capital, Vol. 6 No. 3, pp. 397-416.
Abdul Rashid, A., Ibrahim, M.K., Othman, R. and See, K.F. (2012), IC disclosures in IPO
prospectuses: evidence from Malaysia, Journal of Intellectual Capital, Vol. 131, pp. 57-80.
Abeysekera, I. (2006), The project of intellectual capital disclosure: researching the research,
Journal of Intellectual Capital, Vol. 7 No. 1, pp. 61-77.
Abeysekera, I. (2007), Intellectual capital reporting differences between a developed and
developing nation, Journal of Intellectual Capital, Vol. 8 No. 2, pp. 329-345.
Abeysekera, I. (2008), Intellectual capital disclosure trends: Singapore and Sri Lanka, Journal of
Intellectual Capital, Vol. 9 No. 4, pp. 723-737.
Abeysekera, I. (2010), The influence of board size on intellectual capital disclosure by Kenyan
listed firms, Journal of Intellectual Capital, Vol. 11 No. 4, pp. 504-518.
Abeysekera, I. and Guthrie, J. (2005), An empirical investigation of annual reporting trends
of intellectual capital in Sri Lanka, Critical Perspectives on Accounting, Vol. 16 No. 3,
pp. 151-163.

Amran, A. and Devi, S.S. (2008), The impact of government and foreign affiliate influence
on corporate social reporting: the case of Malaysia, Managerial Auditing Journal, Vol. 23
No. 4, pp. 386-404.
An, Y., Davey, H. and Eggleton, I.R.C. (2011), Towards a comprehensive theoretical
framework for voluntary IC disclosure, Journal of Intellectual Capital, Vol. 12 No. 4,
pp. 571-585.
April, K.A., Bosma, P. and Deglon, D.A. (2003), IC measurement and reporting: establishing a
practice in SA mining, Journal of Intellectual Capital, Vol. 4 No. 2, pp. 165-180.
Belkhir, M. (2009), Board of directors size and performance in the banking industry,
International Journal of Managerial Finance, Vol. 5 No. 2, pp. 201-221.
Boesso, G. and Kumar, K. (2007), Drivers of corporate voluntary disclosure: a framework and
empirical evidence from Italy and the United States, Accounting, Auditing &
Accountability Journal, Vol. 20 No. 2, pp. 269-296.
Bontis, N. (2003), Intellectual capital disclosure in Canadian corporations, Journal of Human
Resource Costing and Accounting, Vol. 7 Nos 1/2, pp. 9-20.
Bozzolan, S., Favotto, F. and Ricceri, F. (2003), Italian annual intellectual capital disclosure: an
empirical analysis, Journal of Intellectual Capital, Vol. 4 No. 4, pp. 543-558.
Branco, M., Delgado, C., Sa, M. and Sousa, C. (2010), An analysis of intellectual capital
disclosure by Portuguese companies, EuroMed Journal of Business, Vol. 5 No. 3,
pp. 258-278.
Brennan, N. (2001), Reporting intellectual capital in annual reports: evidence from Ireland,
Accounting, Auditing & Accountability Journal, Vol. 14 No. 4, pp. 423-436.
Burgman, R. and Roos, G. (2007), The importance of intellectual capital reporting: evidence and
implications, Journal of Intellectual Capital, Vol. 8 No. 1, pp. 7-51.
Cerbioni, F. and Parbonetti, A. (2007), Exploring the effects of corporate governance on
intellectual capital disclosure: an analysis of European biotechnology companies,
European Accounting Review, Vol. 16 No. 4, pp. 791-826.
Choong, K.K. (2008), Intellectual capital: definitions, categorization and reporting models,
Journal of Intellectual Capital, Vol. 9 No. 4, pp. 609-638.
Claessens, S., Dyankov, S. and Lang, L.H.P. (2000), The separation of ownership and control in
East Asian corporations, Journal of Financial Economics, Vol. 58 Nos 1-2, pp. 81-112.
Coles, J.L., Daniel, N.D. and Naveen, L. (2008), Boards: does one size fit all?, Journal of Financial
Economics, Vol. 87 No. 2, pp. 329-356.
Cooke, T.E. (1989), Disclosure in the corporate annual reports of Swedish companies,
Accounting and Business Research, Vol. 19 No. 74, pp. 113-124.
Dahya, J., Lonie, A.A. and Power, D.M. (1996), The case for separating the roles of chairman and
CEO: an analysis of stock market and accounting data, Corporate Governance: An
International Review, Vol. 4 No. 1, pp. 71-77.
Dalton, C.M. and Dalton, D.R. (2005), Boards of directors: utilizing empirical evidence in
developing practical prescriptions, British Journal of Management, Vol. 16 No. S1,
pp. S91-S97.
David, P. and Kochhar, R. (1996), Barriers to effective corporate governance by institutional
investors: implications for theory and practice, European Management Journal, Vol. 14
No. 5, pp. 457-466.
Donaldson, L. and Davis, J.H. (1991), Stewardship theory or agency theory: CEO governance and
shareholder returns, Australian Journal of Management, Vol. 16 No. 1, pp. 49-64.
Eng, L.L. and Mak, Y.T. (2003), Corporate governance and voluntary disclosure, Journal of
Accounting and Public Policy, Vol. 22 No. 4, pp. 325-345.

ICD and
corporate
governance
47

ARA
21,1

48

Fama, E.F. (1980), Agency problems and the theory of the firm, Journal of Political Economy,
Vol. 88 No. 2, pp. 288-307.

Garca-Meca, E. and Martinez, I. (2005), Assessing the quality of disclosure on intangibles in the
Spanish capital market, European Business Review, Vol. 17 No. 4, pp. 305-313.
Ghosh, S.R. (2006), East Asian Finance: The Road to Robust Markets, World Bank,
Washington, DC.
Goh, P.C. and Lim, K.P. (2004), Disclosing intellectual capital in company annual reports:
evidence from Malaysia, Journal of Intellectual Capital, Vol. 5 No. 3, pp. 500-510.
Goodstein, J., Gautam, K. and Boeker, W. (1994), Research notes and communications: the
effects of board size and diversity on strategic change, Strategic Management Journal,
Vol. 13 No. 3, pp. 241-250.
Gujarati, D.N. and Porter, D.C. (2009), Basic Econometrics, 5th ed., McGraw-Hill, New York, NY.
Guthrie, J. and Parker, L.D. (1990), Corporate social disclosure practice: a comparative
international analysis, Advances in Public Interest Accounting, Vol. 3, pp. 159-175.
Guthrie, J. and Petty, R. (2000), Intellectual capital: Australian annual reporting practices,
Journal of Intellectual Capital, Vol. 1 No. 3, pp. 241-251.
Guthrie, J., Petty, R. and Ricceri, F. (2006), The voluntary reporting of intellectual capital:
comparing evidence from Hong Kong and Australia, Journal of Intellectual Capital, Vol. 7
No. 2, pp. 254-271.
Guthrie, J., Petty, R., Yongvanich, K. and Ricceri, F. (2004), Using content analysis as a research
method to inquire into intellectual capital reporting, Journal of Intellectual Capital, Vol. 5
No. 2, pp. 282-293.
Haniffa, R.M. and Cooke, T.E. (2002), Culture, corporate governance, and disclosure in
Malaysian corporations, ABACUS, Vol. 38 No. 3, pp. 317-349.
Haniffa, R.M. and Cooke, T.E. (2005), The impact of culture and governance on corporate social
responsibility, Journal of Accounting and Public Policy, Vol. 24 No. 5, pp. 391-430.
Hidalgo, R.L., Garca-Meca, E. and Martnez, I. (2011), Corporate governance and intellectual
capital disclosure, Journal of Business Ethics, Vol. 100 No. 3, pp. 483-495.
Ho, S.M. and Wong, K.S. (2001), A study of the relationship between corporate governance
structures and the extent of voluntary disclosure, Journal of Accounting, Auditing and
Taxation, Vol. 10 No. 1, pp. 139-156.
Huang, C.C., Tayles, M. and Luther, R. (2010), Contingency factors influencing the availability of
internal intellectual capital information, Journal of Financial Reporting and Accounting,
Vol. 8 No. 1, pp. 4-21.
Jensen, M.C. (1993), The modern industrial revolution, exit, and the failure of internal control
systems, Journal of Finance, Vol. 48 No. 3, pp. 831-880.
Kamath, B. (2008), Intellectual capital disclosure in India: content analysis of TecK firms,
Journal of Human Resource Costing & Accounting, Vol. 12 No. 3, pp. 213-224.
Keenan, J. and Aggestam, M. (2001), Corporate governance and intellectual capital: some
conceptualizations, Corporate Governance: An International Review, Vol. 9 No. 4,
pp. 259-275.
Khanchei, I. (2007), Corporate governance: measurement and determinant analysis,
Managerial Auditing Journal, Vol. 22 No. 8, pp. 740-759.
Kim, K.A. and Nofsinger, J.R. (2004), Corporate Governance, Pearson Prentice Hall, Upper Saddle
River, NJ.
Kyereboah-Coleman, A. (2007), Corporate governance and firm performance in Africa: a
dynamic panel data analysis, paper presented at the International Conference on
Corporate Governance in Emerging Markets, Sabanci University, Istanbul, November 15-17.

Lee, S. (2009), Corporate governance and firm performance, unpublished PhD thesis, The
University of Utah, Salt Lake City, UT.
Li, J., Pike, R. and Haniffa, R. (2008), Intellectual capital disclosure and corporate governance
structure in UK firms, Accounting and Business Research, Vol. 38 No. 2, pp. 137-159.
Lipton, M. and Lorsh, J.W. (1992), A modest proposal for improved corporate governance,
Business Lawyer, Vol. 48 No. 1, pp. 59-77.
Mak, Y.T. and Kusnadi, Y. (2005), Size really matters: further evidence on the negative
relationship between board size and firm value, Pacific-Basin Finance Journal, Vol. 13
No. 3, pp. 301-318.
Meng, S.C. (2009), Are these directors truly independent?, The Edge, January 17, p. 1.
Mohd Ghazali, N.A. (2007), Ownership structure and corporate social responsibility disclosure:
some Malaysian evidence, Corporate Governance: The International Journal of Business
in Society, Vol. 7 No. 3, pp. 251-265.
Mohd Ghazali, N.A. and Weetman, P. (2006), Perpetuating traditional influences: voluntary
disclosure in Malaysia following the economic crisis, Journal of International Accounting,
Auditing and Taxation, Vol. 15 No. 2, pp. 226-248.
OPP3 (2001), Third Outline Perspective Plan, 2001-2010, Chapter 5: Developing Malaysia
into a knowledge-based economy, available at: www.epu.jpm.my (accessed January 19,
2012).
Ordonez de Pablos, P. (2003), Intellectual capital reports in Spain: a comparative view, Journal
of Intellectual Capital, Vol. 4 No. 1, pp. 61-81.
Ousama, A.A., Fatima, A.H. and Hafiz Majdi, A.R. (2011), Usefulness of intellectual capital
information: preparers and users views, Journal of Intellectual Capital, Vol. 12 No. 3,
pp. 430-445.
Patel, S.A., Balic, A. and Bwakira, L. (2002), Measuring transparency and disclosure at firmlevel in emerging markets, Emerging Markets Review, Vol. 3 No. 4, pp. 325-337.
Pfeffer, J. (1972), Size and composition of corporate boards of directors: the organization and its
environment, Administrative Science Quarterly, Vol. 17 No. 2, pp. 218-228.
Pfeffer, J. (1973), Size, composition and function of hospital boards of directors: a study of
organization environment linkage, Administrative Science Quarterly, Vol. 18 No. 3,
pp. 349-364.
Pierce, J. and Zahra, S. (1992), Board composition from a strategic contingency perspective,
Journal of Management Studies, Vol. 29 No. 4, pp. 411-438.
Prencipe, A. (2004), Proprietary costs and determinants of voluntary segment disclosure: evidence
from Italian listed companies, The European Accounting Review, Vol. 13 No. 2, pp. 319-340.
Saleh, M., Zulkifli, N. and Muhamad, R. (2010), Corporate social responsibility disclosure and its
relation on institutional ownership: evidence from public listed companies in Malaysia,
Managerial Auditing Journal, Vol. 25 No. 6, pp. 591-613.
See, K.F. and Abdul Rashid, A. (2011), Determinants of non-disclosure of intellectual capital
information in Malaysian IPO prospectuses, International Journal of Economics and
Finance, Vol. 3 No. 5, pp. 178-186.
Shivdasani, A. and Zenner, M. (2004), Best practices in corporate governance: what two decades
of research reveals, The Bank of American Journal of Applied Corporate Finance, Vol. 16
Nos 2/3, pp. 29-37.
Singh, I. and Zahn, V.J. (2008), Determinants of intellectual capital disclosure in prospectuses of
initial public offerings, Accounting and Business Research, Vol. 38 No. 5, pp. 409-431.
Sveiby, K.E. (1997), The New Organization Wealth: Managing and Measuring Knowledge-Based
Assets, Berrett-Koehler, San Francisco, CA.

ICD and
corporate
governance
49

ARA
21,1

50

Tabachnick, B.G. and Fidell, L.S. (2001), Using Multivariate Statistics, 4th ed., Allyn and Bacon,
Boston, MA.
Taliyang, S.M. and Jusop, M. (2011), Intellectual capital disclosure and corporate governance
structure: evidence in Malaysia, International Journal of Business and Management,
Vol. 6 No. 12, pp. 109-117.
Taliyang, S.M., Abdul Latif, R. and Mustafa, N.H. (2011), The determinants of intellectual
capital disclosure among Malaysian listed companies, International Journal of
Management and Marketing Research, Vol. 4 No. 3, pp. 25-33.
Vafeas, N. (1999), Board meeting frequency and firm performance, Journal of Financial
Economics, Vol. 53 No. 1, pp. 113-142.
Warn, T.S. and Ratnam, S.N. (2010), Intellectual capital disclosure in company prospectuses:
the Malaysia experience, International Journal of Business and Accountancy, Vol. 1 No. 1,
pp. 32-46.
Whiting, R.H. and Miller, J.C. (2008), Voluntary disclosure of intellectual capital in New Zealand
annual reports and the hidden value, Journal of Human Resource Costing & Accounting,
Vol. 12 No. 1, pp. 26-50.
Williams, D.R., Duncan, W.J., Ginter, P.M. and Shewchuk, R.M. (2006), Do governance, equity
characteristics, and venture capital involvement affect long-term wealth creation in US
health care and biotechnology IPOs?, Journal of Health Care Finance, Vol. 33 No. 1,
pp. 54-71.
Yaffe, R. (2006), A Primer for Panel Data Analysis, 4th ed., Pearson Prentice Hall, New York, NY.
Yau, F.S., Chun, L.S. and Balaraman, R. (2009), Intellectual capital reporting and corporate
characteristics of public-listed companies in Malaysia, Journal of Financial Reporting &
Accounting, Vol. 7 No. 1, pp. 17-35.
Yi, A. and Davey, H. (2010), Intellectual capital disclosure in Chinese (mainland) companies,
Journal of Intellectual Capital, Vol. 11 No. 3, pp. 326-347.
Yusoff, W.F.W. and Lim, W. (2011), IC reporting in traditional sectors of Malaysian public listed
firms, Journal of Modern Accounting and Auditing, Vol. 7 No. 9, pp. 966-973.
Further reading
Oliveras, E., Gowthorpe, C., Kasperskaya, Y. and Perramon, J. (2008), Reporting intellectual
capital in Spain, Corporate Communications: An International Journal, Vol. 13 No. 2,
pp. 168-181.

Appendix

Section 1
A
1
2
3
B
4
5
6
7
8
9
Section 2
C
10
11
12
13
D
14
15
16
17
18
19
20
21
22
23
E
24
25
26
Section 3
F
27
28
29
30
31
32
33
34
35
36
37
G
38
39
40

Internal capital
Intellectual property
Patent
Copyright
Trademarks
Corporate culture
Corporate culture
Management philosophy
Information systems
Leadership
Innovation
Research and development
External capital
Information on brands
Brand
Brand recognition
Brand development
Goodwill
Customer base
Information relating to customers
Customer satisfaction
Customers loyalty
Customer appreciation
Customer retention
Customer service/support
Customer feedback system
Special care counters for old/disabled customers
Distribution channels
Customer market share
Partnership
Business collaboration
Licensing agreements
Joint venture
Human capital
Competence
Employee know-how
Education
Vocational qualification
Work-related knowledge
Knowledge sharing
Motivation
Employee expertise
Expert teams
Specialist
Training
Cultural diversity
Personnel
Human resources (number)
Employee satisfaction
Employee retention

ICD and
corporate
governance
51

Table AI.
The ICD index

ARA
21,1

52

About the authors

Abdifatah Ahmed Haji holds a MSc in Accounting from the International Islamic University
Malaysia. His research interests are in the areas of corporate disclosure and governance.
Nazli A. Mohd Ghazali is an Associate Professor at the Department of Accounting,
International Islamic University Malaysia. She received her Bachelor and Masters degrees from
Lancaster University, England and PhD in Accounting and Finance from Strathclyde University,
Scotland. Her research interests are in the areas of disclosure, corporate governance, corporate
social responsibility, risk management and ethics. She has published papers in the Journal of
International Accounting, Auditing and Taxation, Corporate Governance: The International
Journal of Business in Society, Social Responsibility Journal, International Journal of Commerce
and Management, International Journal of Business Governance and Ethics, International Journal
of Disclosure and Governance, Accountants Today and The Malaysian Accountant. Nazli A.
Mohd Ghazali is the corresponding author and can be contacted at: nazlianum@iium.edu.my

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.