THE EFFECT OF CORPORATE GOVERNANCE ON FINANCIAL AND SOCIAL DISCLOSURE OF TAKAFUL COMPANIES IN MALAYSIA

Abstract

The fall of Enron surprised many and begs the question of what constitutes effectiveness in present accounting, auditing, and corporate governance (CG). When the company has become a powerful leading institution, its governance has affected economies in all aspects of the social structure, resulting in shareholders losing confidence and severely affecting market value. Corporate governance (CG) is the most effective way to combat administrative and financial corruption while also protecting the rights of stakeholders within corporations and private investors. This research examines the relationship between CG mechanisms and financial and social disclosure of Takaful companies in Malaysia by using annual reports from year 2018 to 2021. There are 13 total number of Takaful companies involved and 52 annual reports were analysed. Pearson correlation used in the study to investigate the relationship strength between CG mechanisms and financial and social disclosure. The results of the study shows that boards size and audit committee expertise have a negative relationship with return on assets (ROA). Multiple regression has been used to evaluate the effect between CG mechanisms and financial and social disclosure. The study found that board size has a negative and significant effect on ROA.