Whistleblowing Disclosure Policy and Cost of Equity in Asean 5 Publicly Listed Companies: A New Establishment of Regional Whistleblowing Disclosure Scoring Index

Mohd Fairuz Md. Salleh, Wan Sallha Yusoff, Norida Basnan

Abstract


ABSTRACT

Healthy corporate governance is necessary for attracting investor participation and alleviating corruption. Akin to other developing nations, two major challenges arise. First, Increasing foreign direct investments (FDIs) and second, controlling corruption are faced by all countries in the Association of South East Asian Nations (ASEAN) for their economic development. Phenomenal practices of whistleblowing policies in developed countries, especially in Europe and the US, have become crucial elements for modern corporate governance. Such practices also play important roles in detecting fraud and enhancing FDI and GDP growth. The aims of this study are twofold: to uncover the extent of the effects of whistleblowing disclosure quality on cost of equity (COE) and to propose whistleblowing disclosure scoring index as a new mechanism to integrate whistleblowing disclosure policy in the ASEAN region. Furthermore, a proposal for promulgating a comprehensive whistleblowing policy with inclusive internal and external programmes, which are necessary for establishing strong corporate governance, is presented. Empirical results confirm that whistleblowing disclosure quality has a significant negative relationship with COE. Our finding suggests that a uniform and comprehensive whistleblowing policy is needed to strengthen the best practices of ASEAN Corporate Governance Codes.

Keywords: Whistleblowing policy; disclosure; cost of equity; corporate governance; ASEAN

ABSTRAK

Tadbir urus korporat yang sihat adalah penting untuk menarik penglibatan pelabur luar dan mencegah rasuah. Sepertimana negara-negara membangun yang lain, terdapat dua cabaran dalam meningkatkan pembangunan ekonomi negara-negara Kesatuan Asia Tenggara (ASEAN) iaitu; meningkatkan FDI dan mengawal rasuah. Secara praktikal, polisi pendedahan penyelewengan di negara maju, terutamanya Eropah dan Amarika Syarikat mengambilkira tadbir urus korporat yang moden sebagai satu elemen penting dan berperanan untuk mencegah penipuan. Kajian ini bertujuan untuk mencapai dua perkara; pertama, sejauhmanakah pendedahan penyelewengan yang berkualiti dapat mengurangkan kos ekuiti dan kedua mencadangkan indeks skor bagi pendedahan penyelewengan sebagai satu mekanisma baru untuk mengintegrasikan polisi pendedahan penyelewengan di serantau ASEAN. Kajian ini juga mengemukakan cadangan-cadangan untuk memperluaskan polisi pendedahan penyelewengan secara komprehensif dengan merangkumi program dalaman dan luaran di mana ianya penting untuk memperkukuhkan tadbir urus korporat. Merujuk kepada keputusan empirikal, kualiti pendedahan penyelewengan mempunyai hubungan yang signifikan negatif terhadap kos ekuiti. Keputusan kajian mencadangkan bahawa perlunya satu polisi pendedahan penyelewengan yang seragam dan komprehensif untuk memperkukuh amalan baik Tabdir Urus Korporat ASEAN.

Kata kunci: Polisi pendedahan penyelewengan; pendedahan; kos ekuiti; tadbir urus korporat; ASEAN


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