Mandatory compliance by publicly listed companies in Malaysia

The purpose of this study is to examine the accounting standards compliance level among the public listed companies in Malaysia. It also investigates the corporate attributes (profitability, leverage ratio, type of industry, size of company and nature of external auditors) and corporate governance characteristics (number of audit committee meetings, percentage of independent directors in audit committee and size of audit committee) that have a significant influence on the level of mandatory compliance to Malaysian Accounting Standards Board (MASB). One hundred and one annual reports of public companies listed on the main board of Bursa Malaysia were examined. A checklist of 252 items covering MASB1 to MASB 30 was prepared as an instrument to measure the level of MASB compliance using the unweighted approach. The study found that corporate annual reports were prepared in compliance with MASB requirements. However, standards-wise analysis indicated that some standards have a compliance level of less than 50% while others had a zero compliance level. The results of the study would be of immense use to practitioners and regulatory bodies as guidelines towards improving the compliance level and which will further enhance the mandatory compliance among the publicly listed companies.