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Corporate governance performance and financial statement fraud: evidence from Malaysia

Noorul Azwin Md Nasir (Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan , Kota Bharu, Malaysia)
Hafiza Aishah Hashim (Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu , Kuala Terengganu, Malaysia)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 4 November 2020

Issue publication date: 5 August 2021

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Abstract

Purpose

This paper aims to review the performance of corporate governance practices in Malaysia from the beginning of the 21st century until recently. This paper also highlights the history of corporate governance practices in Malaysia and the country’s financial statement fraud situation.

Design/Methodology/Approach

Malaysia is a multi-ethnic society that requires managing corporations and firms collectively. Hence, corporate governance practices and good practices are compelled to fit society’s uniqueness. This paper used the survey findings generated from the Corporate Governance Watch Report (CG Watch Report) by the Credit Lyonnais Securities Asia and the Asian Corporate Governance Association from the year 2002 to the year 2018 and discussed the corporate governance performance related to financial statement fraud in Malaysia. The market ranking survey oversees five categories of corporate governance scores: rules and regulations, enforcement, political/regulatory environment, adoption of International Generally Accepted Accounting Principle and corporate governance culture

Findings

The findings reported that firms in Malaysia have benefited from good laws and regulations through corporate governance reforms.

Practical Implications

This study’s findings are relevant to regulators, board members, shareholders, potential investors, analysts and others to produce more informative timely comparisons. Future research should consider analysing and comparing the corporate governance performance in Malaysia with the corporate governance performance of other countries in Asia.

Originality Value

This study summarized the findings generated from a periodical CG Watch Report from the year 2003 to 2018. This study also underlined the actions of responsible agencies and regulatory bodies determined to have a decent corporate governance practice in Malaysia, especially in minimizing financial statement fraud occurrence in the country.

Keywords

Acknowledgements

The authors thank the Credit Lyonnais Securities Asia (CLSA) and the Asian Corporate Governance Association (ACGA) for the permission to use the outcomes and information written in the CG Watch (2003, 2004, 2005, 2007, 2010, 2012, 2014, 2016, 2018) Report as a useful insight for this article.

Citation

Md Nasir, N.A. and Hashim, H.A. (2021), "Corporate governance performance and financial statement fraud: evidence from Malaysia", Journal of Financial Crime, Vol. 28 No. 3, pp. 797-809. https://doi.org/10.1108/JFC-09-2020-0182

Publisher

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Emerald Publishing Limited

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