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Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Mahfoudh Hussein Mgammal (Accounting Department – College of Humanities and Administrative Sciences, Al Jouf University, Skaka, Saudi Arabia and Amran University, Amran, Yemen)
Barjoyai Bardai (MUST and Universiti Tun Abdul Razak, Kuala Lumpur, Malaysia)
Ku Nor Izah Ku Ismail (TISSA – College of Business, University of Utara Malaysia, Sintok, Malaysia)

Corporate Governance

ISSN: 1472-0701

Publication date: 1 October 2018



This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct.


This study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data.


This study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure.

Research limitations/implications

This study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment.

Practical implications

The evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies.


To the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.



We appreciate helpful comments provided by Nor Shaipah Abdul Wahab, Senior lecturer in Accounting at Taylor’s Business School/Taylor University. We are grateful as this paper has benefitted from her and referee’s constructive comments.


Mgammal, M.H., Bardai, B. and Ku Ismail, K.N.I. (2018), "Corporate governance and tax disclosure phenomenon in the Malaysian listed companies", Corporate Governance, Vol. 18 No. 5, pp. 779-808.



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