The quality and determinants of voluntary disclosures in annual reports of Shari'ah compliant companies in Malaysia

Abdifatah Ahmed Haji (Scicom (MSC) Berhad, Kuala Lumpur, Malaysia)
Nazli Anum Mohd Ghazali (International Islamic University Malaysia, Kuala Lumpur, Malaysia)


ISSN: 0828-8666

Publication date: 15 February 2013



The aim of this study is to investigate the quality of voluntary disclosure practices by Shari'ah compliant companies (ShCCs) in Malaysia. The study also examines factors influencing the quality of voluntary disclosures.


Using a weighted disclosure analyses approach, a self‐constructed disclosure checklist was developed to measure the quality of corporate voluntary disclosures (CVDs). The study examines the annual reports of a sample of 76 ShCCs selected from various sectors listed on Bursa Malaysia in the year 2009.


The results indicate that the quality of voluntary disclosures by ShCCs is in overall low consistent with prior studies that gauged the quality of CVDs in Malaysia. The multivariate regression analyses reveal that board size is significant in explaining the quality of CVDs at the 5 percent significance levels. Company size and leverage as control variables are also significant at the 1 and 10 percent significance levels in determining the quality of CVDs by ShCCs. The reduced regression model further indicates that government ownership is highly significant at the 1 percent significance level in explaining the quality of CVD by ShCCs while leverage is significant at the 5 percent levels.

Practical implications

The low level of corporate disclosures by the ShCCs in Malaysia suggests that these companies require awareness on matters relating to the concepts of accountability and full disclosures in becoming accountable to the community. Hence, the Shari'ah Advisory Council of the Securities Commission Malaysia should provide awareness on matters relating to accountability and transparency which could lead to socio economic justice. The commission may also introduce a detailed reporting guideline for the companies to follow.


This study provides useful insights on the disclosure quality of ShCCs in Malaysia which remained largely unexplored. The study also represents the first empirical investigation toward the association between voluntary disclosures by ShCCs and corporate governance attributes in the Malaysian context.



Ahmed Haji, A. and Anum Mohd Ghazali, N. (2013), "The quality and determinants of voluntary disclosures in annual reports of Shari'ah compliant companies in Malaysia", Humanomics, Vol. 29 No. 1, pp. 24-42.

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