Confluence of Board Members' Financial Literacy, Corporate Environmental Disclosure, and Financial Reporting Quality

Abstract

Objective: This study aim to explores the interesting relationship between the financial literacy of board members, earnings management (EM), and corporate environmental disclosure (CED) in Malaysian listed manufacturing companies. Theoretical framework: We mainly address the implications of this relationship for business stakeholders and for promoting a healthy economic simulation. Research Methods: Robust sample of 258 Malaysian manufacturing listed companies from 2016 to 2021, providing 1290 firm-year observations. A noticeable negative significance is seen when the board's financial literacy variable interacts with the link between CED and EM. Result: This study discovered a significantly positive link between CED and EM. This result implies that CED reduces EM practises when board members are financially literate. Conclusion: These findings highlight how important it is for qualified board members to define the association between CED and earnings manipulation (EM). They stress the value of having a well-qualified board to lessen earnings manipulation and the necessity of managers responding to CED initiatives. This is pivotal for stakeholders who aspire to make well-informed decisions, build trust, and foster sustainable practices within the business ecosystem, ultimately contributing to a more resilient and prosperous economic landscape.