DETERMINANTS OF ENVIRONMENTAL REPORTING QUALITY IN MALAYSIA

International Journal of Economics, Management and Accounting 22, no. 1 (2014): 63-90
© 2014 by The International Islamic University Malaysia

DETERMINANTS OF ENVIRONMENTAL REPORTING
QUALITY IN MALAYSIA
Maliah Sulaimana, Norhayati Abdullahb and A.H. Fatimaa a Department of Accounting, Kulliyyah of Economics and
Management Sciences, International Islamic University Malaysia,
Jalan Gombak, Kuala Lumpur, Malaysia.
(Email:[e-mail]; [e-mail]) b Department of Accounting, Faculty of Business Management and
Accountancy, University Sultan Zainal Abidin, Gong Badak Campus,
Kuala Terengganu, Malaysia. (Email: [e-mail])
ABSTRACT
The study examines the relationship between share ownership distribution, profitability, firm size and leverage with the quality of environmental disclosure in annual reports in 2009, two years after Malaysia made corporate social responsibility disclosure mandatory for all listed companies. Three theories; legitimacy, resource based view and information provided the theoretical underpinnings of the study. A content analysis of the annual report of 164 companies in the environmentally sensitive industries (ESI) was undertaken. Disclosure quality was measured using a self-developed index adapted from prior studies. The findings revealed a significant positive association between firm size and leverage with the quality of environmental reporting, thus providing the support for legitimacy theory. Given that share ownership distribution and profitability had no significant relationship with the quality of environmental reporting, the use of resource based view and information cost theories did not provide any support in explaining environmental reporting behavior of companies in the environmentally sensitive industries in Malaysia.
JEL Classification: O130, O110, H760
Key words: Environmental disclosure, Determinants, Legitimacy, Resource based view, Information cost

64

International Journal of Economics, Management

References: Business Studies 11, no. 1 (2003): 69-90. A Simultaneous Equation Approach.” Accounting, Organizations and Society 29 (2004):447-71. The Case of Malaysia and Singapore.”British Accounting Review 21 (1989): 371-6. International Journal of Economics and Management 17, no. 2 (2009): 177-208. Association of Chartered Accountant (ACCA) MESRA Awards.“A Speech by CEO Bursa Malaysia Berhad.” (2007). no. 1 (2007): 19-44. Auditing Journal 23, no. 4 (2008): 386-404. Environment 5, no. 4 (1996): 219-30. Investigation of Quantity and Quality.” Master dissertation, International Islamic University Malaysia, 2005. Management 27 (2001): 625-41. Accounting, Auditing and Accountability Journal 11, no. 2 (1998): 163-90. United States.” Critical Perspectives on Accounting 12 (2001): 293-322. 23, no. 6 (2008): 609-29. Organizations and Society 32 (2007): 639-47. Reports.” Contemporary Accounting Research 11, no. 1 (1994): 423-50. Collis, D. and C.A. Montgomery. "Competing on Resources: Strategy in the 1990s," Harvard Business Review 73, JulyAugust (1995): 118-28. Accountability Journal 14, no. 5 (2001): 587-616. Accounting, Auditing and Finance 14, no. 4 (1999):429-51. Accounting and Public Policy 22 (2003): 43-62. 1 (2005): 3-39. Eng, L.L., and Y.T. Mak. “Corporate Governance and Voluntary Disclosure.”Journal of Accounting and Public Policy 22 (2003): and Accountability Journal 8, no. 2 (1995): 47-77.