Cover Image

Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia

Deficiencies in the quality of risk reporting impede investors’ ability to make well-informed investment decisions. In the wake of unexpected corporate collapses, calls for a greater amount of voluntary risk disclosures by the regulators are entirely legitimate, in the expectation that improved risk...

Full description

Saved in:
Bibliographic Details
Main Authors: Wahh, Wong Baan, Abdullah, Mazni, Khin, Edward Wong Sek
Format: Article
Published: De La Salle University, Manila, Philippines 2021
Subjects:
HG Finance
Online Access:http://eprints.um.edu.my/35531/
Tags: Add Tag
No Tags, Be the first to tag this record!
id my.um.eprints.35531
record_format eprints
spelling my.um.eprints.355312023-10-17T02:21:43Z http://eprints.um.edu.my/35531/ Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia Wahh, Wong Baan Abdullah, Mazni Khin, Edward Wong Sek HG Finance Deficiencies in the quality of risk reporting impede investors’ ability to make well-informed investment decisions. In the wake of unexpected corporate collapses, calls for a greater amount of voluntary risk disclosures by the regulators are entirely legitimate, in the expectation that improved risk reporting published in the annual report enables investors to assess a firm’s risk profile and its firm value more accurately. This study investigates the relationship between the voluntary corporate risk disclosures (VCRD), board leadership effectiveness, audit committee financial expertise, and firm performance of 290 companies listed on the Kuala Lumpur Stock Exchange (KLSE). To collect and measure the quality of risk disclosures, we performed a manual content analysis method. We employ the partial least square structural equation modeling (PLS-SEM) technique, and the empirical results show that the relationship between VCRD and firm performance is positive and significant. We found a significant and positive relationship between board size and the level of firm performance, as measured by both accounting (ROA) and market-based performance (Tobin’s Q) measures. However, CEO duality is found to be non-significant in its association with firm performance. SEM results further demonstrate that audit committee financial expertise has a positive and significant moderating influence on the VCRD-ROA nexus. Overall, the findings of this study demonstrated that the exogenous latent constructs collectively accounted for 30.8 and 69.3 of the variance in ROA and Tobin’s Q, respectively. Research contributions, policy implications, and future directions are also discussed in this paper. To the best of the authors’ knowledge, no study has yet to examine the interplay between the extent of VCRD, governance mechanisms, and firm performance in Malaysia, following the implementation of the Malaysian Code of Corporate Governance (MCCG) 2017. © 2021 by De La Salle University. De La Salle University, Manila, Philippines 2021-12 Article PeerReviewed Wahh, Wong Baan and Abdullah, Mazni and Khin, Edward Wong Sek (2021) Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia. Asia-Pacific Social Science Review, 21 (4). pp. 159-180. ISSN 0119-8386,
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic HG Finance
spellingShingle HG Finance
Wahh, Wong Baan
Abdullah, Mazni
Khin, Edward Wong Sek
Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
description Deficiencies in the quality of risk reporting impede investors’ ability to make well-informed investment decisions. In the wake of unexpected corporate collapses, calls for a greater amount of voluntary risk disclosures by the regulators are entirely legitimate, in the expectation that improved risk reporting published in the annual report enables investors to assess a firm’s risk profile and its firm value more accurately. This study investigates the relationship between the voluntary corporate risk disclosures (VCRD), board leadership effectiveness, audit committee financial expertise, and firm performance of 290 companies listed on the Kuala Lumpur Stock Exchange (KLSE). To collect and measure the quality of risk disclosures, we performed a manual content analysis method. We employ the partial least square structural equation modeling (PLS-SEM) technique, and the empirical results show that the relationship between VCRD and firm performance is positive and significant. We found a significant and positive relationship between board size and the level of firm performance, as measured by both accounting (ROA) and market-based performance (Tobin’s Q) measures. However, CEO duality is found to be non-significant in its association with firm performance. SEM results further demonstrate that audit committee financial expertise has a positive and significant moderating influence on the VCRD-ROA nexus. Overall, the findings of this study demonstrated that the exogenous latent constructs collectively accounted for 30.8 and 69.3 of the variance in ROA and Tobin’s Q, respectively. Research contributions, policy implications, and future directions are also discussed in this paper. To the best of the authors’ knowledge, no study has yet to examine the interplay between the extent of VCRD, governance mechanisms, and firm performance in Malaysia, following the implementation of the Malaysian Code of Corporate Governance (MCCG) 2017. © 2021 by De La Salle University.
format Article
author Wahh, Wong Baan
Abdullah, Mazni
Khin, Edward Wong Sek
author_facet Wahh, Wong Baan
Abdullah, Mazni
Khin, Edward Wong Sek
author_sort Wahh, Wong Baan
title Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
title_short Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
title_full Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
title_fullStr Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
title_full_unstemmed Do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? The moderating role of audit committee financial expertise in Malaysia
title_sort do voluntary corporate risk disclosures and board leadership effectiveness predict firm performance? the moderating role of audit committee financial expertise in malaysia
publisher De La Salle University, Manila, Philippines
publishDate 2021
url http://eprints.um.edu.my/35531/
_version_ 1781704479511412736
score 13.211869

Similar Items