Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian Evidence

Aust. J. Basic & Appl. Sci.,9(37): 211-219, 2015

26 Pages Posted: 15 Feb 2016 Last revised: 16 Jul 2016

See all articles by Azrul Abdullah

Azrul Abdullah

Universiti Teknologi MARA; Fakultas Vokasi

Ku Nor Izah Ku Ismail

Universiti Utara Malaysia - School of Accountancy

Date Written: December 31, 2015

Abstract

This study examines the extent of information about hedging activities disclosures within the annual reports of Main Market companies listed on Bursa Malaysia. The extent of hedging activities disclosures is captured through a 32-item-template, which consists of a mandatory and voluntary disclosure scores. The results of this study indicate that the extent of information on hedging activities disclosure is still insufficient among the sampled companies even though the disclosure scored is quite high. This study also examines the relationship between the existence of risk management committee (RMC), its characteristics and the extent of information on hedging activities disclosure in two separate statistical models. The regression results imply that the existence of RMC is positive but does not significantly influence the extent of information on hedging activities disclosure. However its characteristics (i.e. RMC independence and RMC meeting) have a significant influence. The findings may provide some meaningful insights to regulators, policymakers and researchers, towards the establishment of RMC as a part of the internal corporate governance mechanisms. In addition to its existence, the effectiveness of RMC also needs to be emphasized.

Keywords: Derivatives, Disclosure Index, Financial Instruments, Hedging Activities, Risk Management Committee (RMC), Hedge Accounting

Suggested Citation

Abdullah, Azrul and Ku Ismail, Ku Nor Izah, Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian Evidence (December 31, 2015). Aust. J. Basic & Appl. Sci.,9(37): 211-219, 2015, Available at SSRN: https://ssrn.com/abstract=2732276

Azrul Abdullah (Contact Author)

Universiti Teknologi MARA ( email )

Universiti Teknologi MARA
Perlis Branch, Arau Campus
Arau, Perlis 02600
Malaysia

Fakultas Vokasi ( email )

Universitas Airlangga, Surabaya, Indonesia
waqar.ahmed.m-2018@feb.unair.ac.id
surabaya, AK jawa timur 60115
Indonesia

Ku Nor Izah Ku Ismail

Universiti Utara Malaysia - School of Accountancy ( email )

Sintok, Kedah Darul Aman 06010
Malaysia

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