Procedia-Social and Behavioral Sciences 145 (2014): 243-253

 

DISCLOSURE OF CORPORATE GOVERNANCE STRUCTURE AND THE LIKELIHOOD OF FRAUDULENT FINANCIAL REPORTING

 

Wan Ainul Asyiqin Wan Mohd Razali and Roshayani Arshad.

 

Abstract

The purpose of this study is to examine the relationships between corporate governance structure and the likelihood of fraudulent financial reporting. Likelihood of fraudulent financial reporting is based on an integration of Beneish M-score model and Altman's Z-score model. These relationships are examined based on content analysis of annual reports of 227 Public Listed Companies in Malaysia for the year 2010-2011. Results of this study provide evidence that the effectiveness of corporate governance structure reduces the likelihood of fraudulent financial reporting. These results indicate that effective corporate governance structure is paramount in enhancing the credibility of financial reporting.

Keywords: Corporate Governance, Board Size, International Experience, Audit Committee Effectiveness, Internal Audit Effectiveness, Independent Non-Executive Director Effectiveness, Fraudulent Financial Reporting.