DETERMINANTS OF ENVIRONMENTAL REPORTING QUALITY IN MALAYSIA
The study examines the relationship between share ownership distribution, Â profitability, firm size and leverage with the quality of environmentalÂ disclosure in annual reports in 2009, two years after Malaysia madeÂ corporate social responsibility disclosure mandatory for all listedÂ companies. Three theories; legitimacy, resource based view and informationÂ provided the theoretical underpinnings of the study. A content analysis ofÂ the annual report of 164 companies in the environmentally sensitiveÂ industries (ESI) was undertaken. Disclosure quality was measured using aÂ self-developed index adapted from prior studies. The findings revealed aÂ significant positive association between firm size and leverage with theÂ quality of environmental reporting, thus providing the support forÂ legitimacy theory. Given that share ownership distribution and profitabilityÂ had no significant relationship with the quality of environmental reporting,Â the use of resource based view and information cost theories did not provideÂ any support in explaining environmental reporting behavior of companies inÂ the environmentally sensitive industries in Malaysia.
Environmental Reporting in Malaysia.â€ International Journal of
Business Studies 11, no. 1 (2003): 69-90.
Al-Tuwaijri, S., T. Christensen, and K. Hughes. â€œThe Relations
Among Environmental Disclosure, Environmental Performance:
A Simultaneous Equation Approach.â€ Accounting, Organizations
and Society 29 (2004):447-71.
Andrew, B.H., F.A. Gul, J.E. Guthrie, and H.Y. Teoh.â€œA Note on
Corporate Social Disclosure Practices in Developing Countries:
The Case of Malaysia and Singapore.â€British Accounting Review
21 (1989): 371-6.
Anuar, H.A., M. Sulaiman, and N.N. Nik Ahmad.â€œSome Evidence of
Environmental Reporting by Shariâ€™ah Compliant Companies.â€
International Journal of Economics and Management 17, no. 2
Association of Chartered Accountant (ACCA) MESRA Awards.â€œA
Speech by CEO Bursa Malaysia Berhad.â€ (2007).
http://www.bursamalaysia.com. April 2009.
Azlan, A., and S. Devi. â€œCorporate Social Reporting in Malaysia: A
Political Theory Perspective.â€ Malaysian Accounting Review 6,
no. 1 (2007): 19-44.
Azlan, A., and S. Devi. â€œThe Impact of Government and Foreign
Affiliate Influence on Corporate Social Reporting.â€Managerial
Auditing Journal 23, no. 4 (2008): 386-404.
Azzone, G., R. Manzini, and G. Noci. â€œEvolutionary Trends in
Environmental Reporting.â€Business Strategy and the
Environment 5, no. 4 (1996): 219-30.
Bakhtiar, A. â€œComparing Environmental Reporting Practice of
Public Listed companies in Malaysia in 1999 and 2003: An
Investigation of Quantity and Quality.â€ Master dissertation,
International Islamic University Malaysia, 2005.
Barney, J.B. â€œFirm Resources and Sustained Competitive
Advantage.â€ Journal of Management17, no. 1 (1991): 99-120.
Barney, J., M. Wright, and D.J. Ketchen Jr. â€œThe Resource-Based
View of the Firms: Ten Years after 1991.â€Journal of
Management 27 (2001): 625-41.
Buhr, N. â€œEnvironmental Performance, Legislation and Annual
Reports Disclosure: The Case of Acid Rain and Falconbridge.â€
Accounting, Auditing and Accountability Journal 11, no. 2
Buhr, N., and M. Freedman. â€œCulture, Institutional Factors and
Differences in Environmental Disclosures between Canada and
United States.â€ Critical Perspectives on Accounting 12 (2001):
Chatterjee, B., and M.Z. Mir. â€œThe Current Status of Environmental
Reporting by Indian Companies.â€Managerial Auditing Journal
23, no. 6 (2008): 609-29.
Cho, C. H., and D.M. Patten. â€œThe Role of Environmental Disclosure
as Tools of Legitimacy: A Research Note.â€Accounting,
Organizations and Society 32 (2007): 639-47.
Clarkson, P.M., J.L. Kao, and G. D. Richardson. â€œThe Voluntary
Inclusion of Forecasts in the MD and A Section of Annual
Reports.â€ Contemporary Accounting Research 11, no. 1 (1994):
Collis, D. and C.A. Montgomery. "Competing on Resources:
Strategy in the 1990s," Harvard Business Review 73, July-
August (1995): 118-28.
Cormier, D., and I.M. Gordon. â€œAn Examination of Social and
Environmental Reporting Strategies.â€ Accounting, Auditing and
Accountability Journal 14, no. 5 (2001): 587-616.
Cormier, D., and M. Magnan. â€œCorporate Environmental Disclosure
Strategies: Determinants, Costs and Benefits.â€ Journal of
Accounting, Auditing and Finance 14, no. 4 (1999):429-51.
Cormier, D., and M. Magnan, â€œEnvironmental Reporting
Management: A Continental European Perspective.â€Journal of
Accounting and Public Policy 22 (2003): 43-62.
Cormier, D., Magnan, M., and B.V. Velthoven, â€œCorporate
Environmental Disclosure Qualities in Large German
Companies: Economic Incentives, Public Pressures or
Institutional Conditions?â€ European Accounting Review 14, no.
1 (2005): 3-39.
Eng, L.L., and Y.T. Mak. â€œCorporate Governance and Voluntary
Disclosure.â€Journal of Accounting and Public Policy 22 (2003):
Fekrat, M.A., C. Inclan, and D. Petroni. â€œCorporate Environmental
Disclosure: Competitive Disclosure Hypothesis using 1991
Annual Report data.â€ The International Journal of Accounting
31, no. 2 (1996): 175-95.
Gray, R., R. Kouhy, and S. Lavers. â€œA Review of the Literature and
a Longitudinal Study of UK Disclosure. â€ Accounting, Auditing
and Accountability Journal 8, no. 2 (1995): 47-77.
Hackston, D., and M. Milne. â€œSome Determinants of Social and
Environmental Disclosures in New Zealand Companies.â€
Accounting, Auditing and Accountability Journal 9, no. 1 (1996):
Huafang, X., and Y. Jianguo. â€œOwnership Structure, Board
Composition and Corporate Voluntary Disclosure: Evidence
from Listed Companies in China.â€ Managerial Auditing Journal
22, no. 6 (2007): 614-19.
Iatridis, G.E. â€œEnvironmental Disclosure Quality: Evidence on
Performance, Corporate Governance and Value Relevance.â€
Emerging Market Review 14 (2013): 55-75.
Kolbe, R.H., and M.S. Burnett. "Content-Analysis Research: An
Examination of Applications with Directives for Improving
Research Reliability and Objectivity." Journal of Consumer
Research 18, September (1991): 243-50.
Kuasirikun, N., and M. Sherer, â€œCorporate Social Accounting
Disclosure in Thailand.â€ Accounting, Auditing and
Accountability Journal 17, no. 4 (2004): 629-60.
Lindblom, C.K. "The Implications of Organizational Legitimacy for
Corporate Social Performance and Disclosure." Paper presented
at the Critical Perspectives on Accounting Conference, New
Lu, Y., and I. Abeysekara. â€œStakeholdersâ€™ Power, Corporate
Characteristics, and Social and Environmental Disclosures:
Evidence from Chinaâ€. Journal of Cleaner Production 64
Magness, V. â€œStrategic Posture, Financial Performance and
Environmental Disclosure: An Empirical test of Legitimacy
Theory.â€ Accounting, Auditing and Accountability Journal 19,
Milne, M.J., and D.M. Patten. â€œSecuring Organizational Legitimacy:
An Experimental Decision Case Examining the Impact of
Environmental Disclosures.â€ Accounting, Auditing and
Accountability Journal 15, no. 3 (2002): 372-405.
Milne, M.J., and R.W. Adler. "Exploring the Reliability of Social
and Environmental Disclosures Content Analysis." Accounting,
Auditing & Accountability Journal 12, no. 2 (1999): 237-56.
Mohd. Ghazali, N.A. â€œOwnership Structure and CSR Disclosure:
Some Malaysian Evidence.â€ Corporate Governance 7, no. 3
Muttakin, M.B., and A. Khan. â€œDeterminants of Corporate Social
Disclosure: Empirical Evidence from Bangladesh.â€ Advance in
Accounting, Incorporating Advance in International Accounting
(2014): In press.
Nik Ahmad, N.N., and M. Sulaiman. â€œEnvironmental Disclosures in
Malaysian Annual Reports: Legitimacy Theory Perspective.â€
International Journal of Commerce and Management 14, no.1
Nik Ahmad, N.N., M. Sulaiman, and D. Siswantoro. â€œCorporate
Social Responsibility Disclosure in Malaysia: An Analysis of
Annual Reports of KLSE Listed Companies.â€ IIUM Journal of
Economics and Management 11, no.1 (2003): 51-86.
Pallant, J. SPSS Survival Manual. A Step by Step Guide to Data
Analysis using SPSS for Windows (Version 10). Open University
Patten, D.M., and J.R. Nance. â€œRegulatory Cost Effects in a Good
News Environment: The Intra-industry Reaction to the Alaskan
Oil Spill.â€ Journal of Accounting and Public Policy 17 (1998):
Peters, G.F., and A.M. Romi. â€œDiscretionary Compliance with
Mandatory Environment Disclosures: Evidence from SEC
Filings.â€ J. Account. Public Policy 32 (2013): 213-36.
Qu, R. â€œCorporate Social Responsibility in China: Impact of
Regulations, Market Structure and Ownership Structure.â€
Chinese Management Series 1, no. 3 (2007): 198-207.
Raar, J. â€œReported Social and Environmental Taxonomies: A
Longer-term Glimpse.â€ Managerial Auditing Journal 22, no. 8
Ramasamy, B., and W.T. Hung. â€œA Comparative Analysis of CSR
Awareness: Malaysian and Singapore Firms.â€ Journal of
Corporate Citizenship 13 (2004): 109-23.
Ross, S.A., R.W. Westerfield, and J. Jaffe, Corporate Finance,
International Edition (Fourth Edition). Irwin McGraw-Hill,1996.
Russo, M.V., and P.A. Fouts. â€œA Resource Based View Perspective
on Corporate Environmental Performance and Profitability.â€
Academy of Management Journal 40, no. 3 (1997): 534-559.
Smith M., K. Yahya, and A.M. Amiruddin. â€œEnvironmental
Disclosure and Performance Reporting in Malaysia.â€ Asian
Review of Accounting 15, no. 2 (2007):185-99.
Teoh, H.Y., and G. Thong. â€œAnother Look at CSR and Reporting:
An Empirical Study in Developing Country.â€ Accounting,
Organization and Society 9, no. 2 (1984): 189-206.
Ten, E.E. â€œCan Stakeholder Theory Add to Our Understanding of
Malaysian Environmental Reporting Attitudes?â€Malaysian
Accounting Review 8, no. 2 (2009): 85-110.
Thomson, P., and Z. Zakaria. â€œCorporate Social Responsibility
Reporting in Malaysia: Progress and Prospect.â€ The Journal of
Corporate Citizenship, Spring 13 (2004):125-36.
Ting, H.W., B. Ramasamy, and L.C. Ging, â€œManagement Systems
and the CSR Engagement.â€ Social Responsibility Journal 6, no.
3 (2010): 362-73.
Tsang, E.W.K. â€œA Longitudinal Study of Corporate Social Reporting
in Singapore. The Case of the Banking, Food and Beverages and
Hotel Industries.â€ Accounting, Auditing and Accountability
Journal 11, no. 5 (1998): 624-35.
Uwalomwa, U.O., and O.M. Uadiale. â€œCorporate Social and
Environmental Disclosure in Nigeria: A Comparative Study of
Building Material and Brewery Industry.â€ International Journal
of Business and Management 6, no. 2 (2011): 258-64.
Villiers de, C. and C.J. Van Staden. â€œCan Less Environmental
Disclosure have a Legitimizing Effect? Evidence from Africa.â€
Accounting, Organization and Society 31(2006): 763-81.
Weber, R.P. Basic Content Analysis, Sage University Paper Series
on Quantitative Applications in the Social Sciences, Series No
07-049. Beverley Hills and London: Sage Publications Inc.,
Wilmshurst, T.D., and G.R. Frost. â€œCorporate Environmental
Reporting. A Test on Legitimacy Theory.â€ Accounting, Auditing
and Accountability Journal 13, no. 1 (2000): 10-26.
Wiseman, J. â€œAn Evaluation of Environmental Disclosures Made in
Corporate Annual Reports.â€Accounting, Organization and
Society 7, no. 1 (1982):53-63.