Governance oversight roles on the voluntary disclosure of internal control systems and its impact on firms performance of Malaysian initial public offerings (IPOs)

摘要

Effective from year 2001, the Bursa Malaysia made it mandatory for companies seeking listing to furnish a disclosure on the state of internal control system (ICS) to their shareholders The main objective of this study is to examine, under signaling and agency theories, whether board and audit committee independence as governance oversight mechanism on the voluntary disclosure of ICS able to improve the firm performance. Based on a sample of 68 Malaysian IPO companies listed from year 2005 to 2008, this study discovers that the voluntary disclosure of ICS has a significant positive impact on the firm performance Consistent with the signalling and agency theories, this study also provides empirical evidence that independent-dominated board are more effective in fulfill their oversight roles on the quality voluntary disclosure of ICS index (VDICSI) and subsequently had positively influence on the firm performance of IPOs The present paper provides useful information that offer great value to Malaysian companies, policymakers, academics and other stakeholders to take into considerations in identifying the corporate governance roles on voluntary disclosure of ICS that will subsequently enhance firms performance.