OWNERSHIP CONCENTRATION, RISK MANAGEMENT COMMITTEE AND HEDGING ACTIVITY DISCLOSURE: A MALAYSIAN CAS

Abstract

The aim of this study is to contribute to the growing literature on the quality of accounting information disclosures related to hedging activities. Unlike previous studies, this study examined the influence of ownership concentrations on the relationship between risk management committee (RMC) effectiveness and hedging activities disclosures (HAD). Based on a sample of 166 public listed companies in Malaysia, the regression results indicated that ownership concentration did not have any significant relationship with the RMC’s effectiveness in influencing the extent of HAD. However, there was little evidence to suggest that the RMC enhanced the extent of HAD when there was interference from concentrated family owners. The results from this study provided limited support for the hypothesised moderation effect based on agency and resource dependency theories which suggested a new bearing in the current literature on the association between ownership structure and RMC on the financial instrument disclosure employed by companies. Consequently, this study perceived that other researchers expanded their current understanding of accounting and reporting practices for derivatives on the impact of concentrated ownership on the extent of financial instrument disclosure which many previous Malaysian studies had failed to include in their discussion.