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The Likelihood of Fraudulent Financial Reporting: The New Implementation of Malaysian Code of Corporate Governance (MCCG) 2017

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  • Siti Fadilah Bt Mat Zin
  • Marziana Madah Marzuki
  • Nik Kamaruzaman Hj. Abdulatiff

Abstract

On 26 April 2017 Securities Commission Malaysia has released new Malaysian Code of Corporate Governance (MCCG 2017) replacing MCCG 2012 with several changes and recommendations to enhance corporate¡¯s accountability, transparency and sustainability. Therefore, the objective of this study is to compare the degree of compliance of this new MCCG 2017 among healthy companies and likelihood of fraudulent financial reporting companies using PN17 companies as a proxy. This study used content analysis of MCCG 2017 and disclosures provided in the annual report of the companies and analyzed it using descriptive statistics. We find that the degree of compliance even among healthy companies in Malaysia in terms of board diversity and board remuneration is still insufficient, and some of the companies are still reluctant to comply. This study provides initial evidence on the effect of new amendment of MCCG 2017 on the likelihood of fraudulent financial reporting in Malaysia.

Suggested Citation

  • Siti Fadilah Bt Mat Zin & Marziana Madah Marzuki & Nik Kamaruzaman Hj. Abdulatiff, 2020. "The Likelihood of Fraudulent Financial Reporting: The New Implementation of Malaysian Code of Corporate Governance (MCCG) 2017," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(3), pages 84-91, June.
    • Handle: RePEc:jfr:ijfr11:v:11:y:2020:i:3:p:84-91
    DOI: 10.5430/ijfr.v11n3p84
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    References listed on IDEAS

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    1. Roshayani Arshad & Sharinah Mohamed Iqbal & Normah Omar, 2015. "Prediction of Business Failure and Fraudulent Financial Reporting: Evidence from Malaysia," Indian Journal of Corporate Governance, , vol. 8(1), pages 34-53, June.
    2. Ana Paula P. Costa, 2017. "Corporate Governance and Fraud: Evolution and Considerations," Chapters, in: Okechukwu Lawrence Emeagwali (ed.), Corporate Governance and Strategic Decision Making, IntechOpen.
    3. Dayana Mastura Baharudin & Maran Marimuthu, 2019. "Comparison of MCCG 2012 and MCCG 2017: Board Tenure and Board Independence across the Malaysian Oil and Gas PLCs," Business Management and Strategy, Macrothink Institute, vol. 10(2), pages 82-96, December.
    4. Maryam Firoozi & Michel Magnan & Steve Fortin, 2016. "Board Diversity and Financial Reporting Quality," CIRANO Working Papers 2016s-27, CIRANO.
    5. Mohammed Hassan Makhlouf & Fares Jamiel Al-Sufy & Haitham Almubaideen, 2018. "Board Diversity and Accounting Conservatism: Evidence from Jordan," International Business Research, Canadian Center of Science and Education, vol. 11(7), pages 130-141, July.
    6. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
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    More about this item

    Keywords

    MCCG 2017; corporate governance; women; remuneration; PN17;
    All these keywords.

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