Corporate governance performance and financial statement fraud: evidence from Malaysia
| DOI | https://doi.org/10.1108/JFC-09-2020-0182 |
| Published date | 04 November 2020 |
| Date | 04 November 2020 |
| Pages | 797-809 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Noorul Azwin Md Nasir,Hafiza Aishah Hashim |
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, and
Hafiza Aishah Hashim
Faculty of Business, Economics and Social Development,
Universiti Malaysia Terengganu, Kuala Terengganu, Malaysia
Abstract
Purpose –This paper aims to reviewthe performance of corporate governance practices in Malaysiafrom
the beginning of the 21st century until recently. This paper also highlights the history of corporate
governancepractices in Malaysia and the country’sfinancial statementfraud 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 fitsociety’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 performa nce related to financial statement fraud in Malaysia. The market ranking survey
oversees five categories of corp orate governance score s: rules and regulations , enforcement, politi cal/
regulatory environment, adoption of International Generally Accepted Accounting Principle and
corporate governan ce culture
Findings –The findings reported that firms in Malaysiahave benefited from good laws and regulations
through corporategovernance reforms.
Practical Implications –This study’sfindingsare 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
corporategovernance performance of other countries in Asia.
Originality Value –This study summarized the findings generatedfrom 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
financialstatement fraud occurrence in the country.
Keywords Corporate governance, Financial statement fraud
Paper type Viewpoint
1. Introduction
Past research argued that weak corporate governance structures are the reasons behind
financial statement fraud (García Lara et al., 2009;Yang et al.,2017). Shu et al. (2018)
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.
Corporate
governance
performance
and financial
797
Journalof Financial Crime
Vol.28 No. 3, 2021
pp. 797-809
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2020-0182
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