Director’s Integrity: An Assessment of Corporate Integrity

28 Pages Posted: 1 Dec 2010 Last revised: 3 Feb 2011

See all articles by Aida Maria Ismail

Aida Maria Ismail

Universiti Teknologi MARA (UiTM) - Faculty of Accountancy

Date Written: November 30, 2010


Present corporate governance practices have created an era of corporate conformance: ticking boxes, running through drills and complying with codes. However, most corporate governance problems centre on human weaknesses. This discrepancy points to serious limitations in the present rule-based governance system. Annual reports have failed to communicate fair 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. This study seeks to address the methodology issues that arise when assessing and measuring corporate governance practices in publicly listed companies. It advances the analysis of corporate governance practices by obtaining from members of company boards of directors and top management their perceptions and opinions of what is important to assuring directors’ integrity. Corporate governance indicators were used to design a scale that measured the assessment of directors’ integrity. Factor analysis was then used to identify nine directors’ integrity factors. The present study reports the validation of corporate governance reporting by benchmarking it against the boards of directors’ and top management’s perceptions and opinions about directors’ governance. The integrity factors identified earlier were used in the validation.

Keywords: corporate governance indicators, corporate performance, directors’ integrity factors, validation

JEL Classification: G3, G39

Suggested Citation

Ismail, Aida Maria, Director’s Integrity: An Assessment of Corporate Integrity (November 30, 2010). Finance and Corporate Governance Conference 2011 Paper. Available at SSRN: or

Aida Maria Ismail (Contact Author)

Universiti Teknologi MARA (UiTM) - Faculty of Accountancy ( email )

Menara SAAS
Level 11, UiTM
Shah Alam, Selangor 40500

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