Corporate Governance Dilemma - Evidence from Malaysia

Abstract

The topic of corporate governance has entered the agendas of many boards of directors in recent years. It is no longer a topic for idealists or academics. More corporate leaders are convinced by the necessity of good corporate governance. Reviewing corporate annual reports has become one of the commonly used techniques to analyse corporate governance practices. In Malaysia, annual reports are seen to be less effective in conveying useful corporate governance information to the users due to the disclosure of information that is not relevant to them or that current users demand more from the contents of annual reports. Users also consider other sources of information about the companies as more reliable, trusted and easily accessible relative to a firm’s annual report. This has point out how the present rule-based governance system has serious limitations. Annual report has failed to communicate corporate governance information to the public. Ticking off boxes for compliance only leads to a false sense of security that the right judgements and right actions are being taken. In this study,  interviews with ‘board of directors’ and ‘governance experts’ uncovered some of the inadequacies pertaining to corporate governance reporting in Malaysia and identified  how they could be addressed. The findings provide clearer views regarding this issue and can assist security regulators to improve and promote good corporate governance among Malaysian government link companies.

Keywords: corporate governance, rating, reporting, independent monitoring, board of director