The Association Between Committees Responsible for Risk Management and the Disclosure Level of Financial Instruments Information Among Listed Companies in Malaysia

Abstract

Low-level disclosure of financial instruments information may lead to information asymmetry between managers and investors, and subsequently mislead investors when making their decisions and also raise agency problems. This thesis investigates the disclosure level of financial instruments information of companies which are listed on the main board of Bursa Malaysia (Malaysian Stock Exchange). The purpose of the thesis is, from an agency theory perspective, to explore the association between Committees Responsible for Risk Management (CRfRM) and the disclosure level of financial instruments information. The study mainly focuses on three committees responsible for risk management: Risk Management Committees (RMC), Internal Audit (IA), and Outsourced Internal Audit (OIA). In this study, we measure the disclosure level based on an index that developed based on FRS 132 Financial Instruments: Presentation and Disclosure. The results indicate that, on average, the disclosure level of financial instruments information in 2008 was low, as it has slightly decreased compared to 2003. The results also indicate that the effectiveness of CRfRM among companies in Malaysia can still be questioned.