Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Purpose – 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.Design/methodology/approach – This study uses...

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Main Authors: Mgammal, Mahfoudh Hussein, Bardai, Barjoyai, Ku Ismail, Ku Nor Izah
Format: Article
Language:English
Published: Emerald Publishing Limited 2018
Subjects:
Online Access:http://repo.uum.edu.my/23641/1/IJBS%202018%201%2030.pdf
http://repo.uum.edu.my/23641/
http://doi.org/10.1108/CG-08-2017-0202
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spelling my.uum.repo.236412018-03-15T01:34:23Z http://repo.uum.edu.my/23641/ Corporate governance and tax disclosure phenomenon in the Malaysian listed companies Mgammal, Mahfoudh Hussein Bardai, Barjoyai Ku Ismail, Ku Nor Izah HJ Public Finance Purpose – 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.Design/methodology/approach – 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. Findings – 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.Originality/value – 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. Emerald Publishing Limited 2018 Article PeerReviewed application/pdf en http://repo.uum.edu.my/23641/1/IJBS%202018%201%2030.pdf Mgammal, Mahfoudh Hussein and Bardai, Barjoyai and Ku Ismail, Ku Nor Izah (2018) Corporate governance and tax disclosure phenomenon in the Malaysian listed companies. Corporate Governance: The international journal of business in society. ISSN 1472-0701 http://doi.org/10.1108/CG-08-2017-0202 doi:10.1108/CG-08-2017-0202
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
topic HJ Public Finance
spellingShingle HJ Public Finance
Mgammal, Mahfoudh Hussein
Bardai, Barjoyai
Ku Ismail, Ku Nor Izah
Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
description Purpose – 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.Design/methodology/approach – 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. Findings – 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.Originality/value – 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.
format Article
author Mgammal, Mahfoudh Hussein
Bardai, Barjoyai
Ku Ismail, Ku Nor Izah
author_facet Mgammal, Mahfoudh Hussein
Bardai, Barjoyai
Ku Ismail, Ku Nor Izah
author_sort Mgammal, Mahfoudh Hussein
title Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
title_short Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
title_full Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
title_fullStr Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
title_full_unstemmed Corporate governance and tax disclosure phenomenon in the Malaysian listed companies
title_sort corporate governance and tax disclosure phenomenon in the malaysian listed companies
publisher Emerald Publishing Limited
publishDate 2018
url http://repo.uum.edu.my/23641/1/IJBS%202018%201%2030.pdf
http://repo.uum.edu.my/23641/
http://doi.org/10.1108/CG-08-2017-0202
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score 13.144533