Extent of Corporate Voluntary Disclosure: The nexus of research and teaching

by Dr. Pauline Ho

A critical element of being an effective teacher is the understanding of the subject matter, including the underlying theories and conceptual framework. It is imperative to keep abreast with what has taken place, and is taking place, in a field.

I strongly believe teaching and research complement each other. To be an effective teacher, one must be actively involved in research to bring fresh ideas and knowledge to class.

General purpose financial reporting is the provision of information about the reporting entity that is useful to present and potential investors, lenders and other stakeholders in making sound economic decisions.

It encompasses the provision of information that is of both mandatory and voluntary nature. The former is included in financial statements in accordance with the International Accounting Standard Board Framework, accounting standards, and corporation law. The latter refers to the discretionary release of information in excess of mandatory requirements.

My prior studies have demonstrated the capital market effects associated with firms providing increased voluntary disclosure. These include reduced information asymmetry between management and investors, decreased cost of capital, increased stock liquidity, improved stock performance, and improved analyst following.

To be relevant in the teaching of financial accounting as well as contribute to the stock of knowledge of accounting literature, a series of research studies relating to voluntary disclosure of information is currently being conducted either on my own or in collaboration with academic staff from Curtin’s main Bentley Campus.

While the studies examine determinants influencing the disclosure practices of listed firms under different context, they also investigate the extent of voluntary disclosure within the annual reports of Malaysian listed firms over an eleven-year longitudinal timeframe (1996 – 2006).

Embarking on research in this area enables me to share with my students other aspects of disclosures besides mandatory disclosures. The purpose of this article is to share my research findings into the level of voluntary disclosure practices of Malaysian-listed firms from 1996 till 2006. This time period provides meaningful analysis in that disclosure change is expected in view of various regulatory and governance changes being implemented.

A rigorous process is being adopted in developing a comprehensive voluntary disclosure instrument comprising 85 items used to measure the extent of voluntary disclosure. The voluntary disclosure items are categorised into five key categories namely, (i) corporate and strategy information; (ii) financial and capital market data, (iii) board and senior management information, (iv) future prospects information; and (v) corporate social responsibility.

The corporate and strategy category of information (CSD) relates to firm background, market and competition, industry competitiveness and prevailing economic and political situations that can affect a firm.

Business strategy information is a complex but increasingly important subject in the face of globalisation and liberalisation. Strategy impacts many aspects of a firm and ultimately impacts a firm’s performance. Thus, strategy information becomes the fabric of a firm’s disclosure in the annual reports.

Financial and capital market data information (FCMD) covers the historical information presented in the accounts, including the key financial ratios, the review of the firm’s performance, and wealth creation, as well as the trend of volume of shares traded, market capitalisation and share prices.

Directors and senior management (DSMD) relates to information about their qualification, experience and positions held in the firm.

Forward-looking disclosure (FLD) refers to the information that relates to future prospects, forecasts, and potential of a firm.

Corporate social responsibility (CSRD) covers information about corporate philanthropy, environment, employees, and other information pertinent to society. Corporate social responsibility (CSR) itself has been the subject of substantial academic research. Voluntary disclosure of this information may be used to reinforce the community’s perception of management’s responsiveness to specific social responsibility issues and to legitimise corporate actions.

Due regard is given to CSR communicated to stakeholders in annual reports. Students are reminded of the importance of this concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.

CSR endeavours can make a significant contribution towards sustainability and competitiveness, both in Malaysia and globally. CSR is more relevant than ever in the context of economic crises. It can help to build (and rebuild) trust in business, which is vital for the health of Malaysia’s market economy. It can also point the way to new forms of value creation based on addressing societal challenges, which may represent a way out of a crisis.

On the whole, it has been found that the extent of voluntary disclosure increased from 22.97% in 1996 to 34.12% in 2006. Statistically, this increase is significant. Notwithstanding the increase, the overall extent of voluntary disclosure is generally low.

All the five categories of voluntary disclosures demonstrate an increase from 1996 to 2006. Malaysian firms tended to disclose corporate and strategy information in all the years under study. There has been a greater focus of disclosure centred on information pertaining to directors and senior management since 2001, which could be attributed to the implementation of the Malaysian Code of Corporate Governance. All the other categories of information showed a moderate increase over time.

The table below shows the descriptive statistics for all sample firms (300 firms) for all the years. The results reveal that corporate and strategy information (CSD) was popularly communicated by Malaysian listed firms, followed by directors and senior management (DSMD), financial and capital market data (FCMD) and forward looking information (FLD), over the 11-year period. Sadly, CSR information (CSRD) was least communicated in the annual reports of Malaysian listed firms.

TABLE: Descriptive statistics for all sample firms for all years


















Std. deviation


















The current economic climate presents an enormous challenge to corporations to commit to sustainable business practices and position themselves as business leaders to their competitive advantage. While doing so, it explicitly demonstrates the critical need for sound voluntary disclosure of non-financial information.

The undertaking of this study has allowed me to relate the research findings to my students. It not only helps them become more aware of the voluntary disclosure practices of firms listed in Bursa Malaysia but also acknowledges the fact that the non-financial reporting system has become a vital complement to financial reporting.

The study also has important practical implications for Malaysian regulators and policy-makers in encouraging the trend of voluntary disclosure to enhance corporate transparency and accountability.

Dr. Pauline Ho is an accounting lecturer and Coordinator of Research and Development at Curtin Sarawak’s School of Business. Her teaching focus is in financial accounting and taxation. Prior to joining Curtin Sarawak in 1999, Dr. Ho began her carer in a leading audit firm where she gained vast experience in audit and taxation of a wide range of industrial portfolios. She then joined one of the leading merchant banks in Malaysia to gain further insights into corporate finance and treasury. Her research interests include corporate disclosure and governance, capital structure and financing decisions of small and medium enterprises, and accounting and IT, and she has a number of research publications to her credit. She can be contacted at +60 85 443939 or by e-mail to pauline.ho@curtin.my.