Corporate Governance Practices and Environmental Reporting of Companies in Malaysia: Finding Possibilities of Double Thumbs Up

Abstract

Demonstrating good corporate governance and maintaining sound environmental performance are among the key challenges facing the organisation to ensure its sustainability. In an attempt to investigate the linkage between these two essential aspects, this study scrutinises the annual reports of 243 companies listed on the Main Board of Bursa Malaysia. There are six selected corporate governance attributes namely, board independence, CEO duality, management ownership, board size, financial expert and meeting frequency. Overall, it was found that the existence of environmental reporting is low. Only 28% of the companies disclosed environmental information. Furthermore, on average, each company reported 4.7 sentences, while the quality, as measured by the disclosure index shows an average of 3.24. The most significant corporate governance attributes in influencing the extent of environmental reporting are board size and management ownership. The finding provide limited evidence to support that, companies which comply with corporate governance practices have the tendencies to be more environmentally responsible. ABSTRAK Amalan tadbir urus korporat yang baik dan mengekalkan prestasi alam sekitar merupakan antara cabaran utama yang dihadapi oleh organisasi dalam memastikan kelangsungan pembangunan. Kajian ini meneliti 243 laporan tahunan syarikat tersenarai di Papan Utama Bursa Malaysia bagi mengkaji perkaitan antara kedua-dua aspek penting tersebut. Sebanyak enam ciri tadbir urus yang dipilih iaitu kebebasan lembaga pengarah, dwi-jawatan ketua pegawai eksekutif, pemilikan saham, saiz lembaga pengarah, kecekapan kewangan dan kekerapan mesyuarat. Secara keseluruhan, laporan alam sekitar adalah rendah. Hanya 28% syarikat melaporkan maklumat alam sekitar. Di samping itu, secara purata, setiap syarikat melaporkan 4.7 ayat. Manakala bagi kualiti yang diukur dengan indeks pelaporan menunjukkan purata sebanyak 3.24. Ciri tadbir urus yang paling mempengaruhi laporan alam sekitar ialah saiz lembaga pengarah dan pemilikan saham. Keputusan ini tidak dapat menyokong sepenuhnya bahawa syarikat yang memenuhi amalan tadbir urus mempunyai kecenderungan untuk lebih bertanggungjawab terhadap alam sekitar.

Firm and Board Characteristics, and E-Waste Disclosure: A Study in the Era of Digitalisation

“…Meanwhile, in a Malaysian scenario, Khan, Muttakin and Siddiqui [32] revealed that firms' financial performance is an essential indicator of Malaysian listed firms' sustainability disclosures. Similarly, Buniamin, et al [31] and Suryani and Pirzada [50] explain that firm size and performance positively impact environmental disclosure by business firms.…”

“…Therefore, having many persons sit on the board with various experience and qualifications may enhance their legitimacy. Past studies have demonstrated a strong association between sustainability or environmental practices and board size [31,[52][53][54]. Benomran, et al [52], who studied the effect of board size on corporate social and environmental disclosure in Libya, revealed the positive and significant linkage between the two.…”

“…However, studies that focused on the commitment and reporting of business organisations are still lacking. Although studies on environmental reporting or waste disclosure among Malaysia listed firms are extensively conducted [30][31][32][33], limited evidence has been found on e-waste disclosure, one of the disclosures enacted in the Sustainability Reporting Guide for Bursa Malaysia listed firms. According to the guide, Bursa Malaysia listed firms are required to disclose their commitments in handling e-waste, mainly applied to those involved in the telecommunication and technology industries.…”

“…Large firms, such as those listed on Bursa Malaysia, have the capability and resources to perform the environmental agenda. Their ability to commit to environmental-related activities may be justified by past research [30][31][32][33]. Despite their capability in committing to the environmental sustainability agenda, evidence on the commitment to e-waste management is scarce.…”

Factors influencing the environmental accounting disclosure practices for sustainable development: A systematic literature review

“…This enthusiasm has been shared by Scholars, environmental activists, educators, lawmakers, government, local communities, customers, and organizations. Therefore, companies are facing dual effects and problems with the pressure to engage in environmental activities (Anoke, Onu, & Agagbo, 2022;Buniamin, Alrazi, Johari, & Rahman, 2011;Hawlader, Rana, Kalam, & Polas, 2021;Qiu, Shaukat, & Tharyan, 2016) and development (El Fallahi, Ibenrissoul, & Adil, 2022;Kooli, lock Son, & Beloufa, 2022). Industrial development helps the nation realize a sustainable economy, although it negatively affects the environment (Gumbo et al, 2022;Isaifan and Kooli, 2022).…”