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: text
Published: Animo Repository 2021
Subjects:
Online Access:https://animorepository.dlsu.edu.ph/apssr/vol21/iss4/28
https://animorepository.dlsu.edu.ph/context/apssr/article/1454/viewcontent/RA_2011.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: De La Salle University
id oai:animorepository.dlsu.edu.ph:apssr-1454
record_format eprints
spelling oai:animorepository.dlsu.edu.ph:apssr-14542024-06-24T02:24:02Z 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 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. 2021-12-30T08:00:00Z text application/pdf https://animorepository.dlsu.edu.ph/apssr/vol21/iss4/28 info:doi/10.59588/2350-8329.1454 https://animorepository.dlsu.edu.ph/context/apssr/article/1454/viewcontent/RA_2011.pdf Asia-Pacific Social Science Review Animo Repository Risk disclosure Board Leadership Effectiveness Firm performance Malaysian Code of Corporate Governance Structural Equation Modeling
institution De La Salle University
building De La Salle University Library
continent Asia
country Philippines
Philippines
content_provider De La Salle University Library
collection DLSU Institutional Repository
topic Risk disclosure
Board Leadership Effectiveness
Firm performance
Malaysian Code of Corporate Governance
Structural Equation Modeling
spellingShingle Risk disclosure
Board Leadership Effectiveness
Firm performance
Malaysian Code of Corporate Governance
Structural Equation Modeling
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.
format text
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 Animo Repository
publishDate 2021
url https://animorepository.dlsu.edu.ph/apssr/vol21/iss4/28
https://animorepository.dlsu.edu.ph/context/apssr/article/1454/viewcontent/RA_2011.pdf
_version_ 1806510968913526784