Corporate governance characteristics and impression management in financial statements. A further analysis. Malaysian evidence

Abstract

According to research, accounting narratives are frequently utilized and valued in the investing choices of both individual and institutional investors. Nevertheless, slight study has examined on the association between internal corporate governance mechanisms and impression management (IM). Rely on theories like agency and signaling, this research investigates the impact of board chairman qualities, characteristics of board of director, ownership structure and characteristics of audit committee on IM. The research population consists of non-financial Malaysian companies listed on Bursa Malaysia’s Main Market. The study uses ordinary least squares (OLS) regression to test the direct relationships directors’ chairman characteristics and impression management. Moreover, robustness and sensitivity test were used to examine the effectiveness of chairman characteristics with IM. This study finds that board of directors’ characteristics has significant association with IM. Moreover, characteristics of board chairman, audit committee and ownership structure has impact significant on IM. In addition, this study demonstrates that the effectiveness of the chairman and board of directors has a considerable impact on IM. Giving the right parties—policymakers, standard-setters, and regulatory bodies—a reference point to use as they work to enhance the caliber of financial reporting quality (FRQ) and corporate governance practices in light of the study’s findings aids in raising awareness of IM practices and internal corporate governance mechanisms among Malaysian listed companies.