VOLUNTARY DISCLOSURE OF ASSET IMPAIRMENT AND CORPORATE GOVERNANCE OF MALAYSIAN COMPANIES

Abstract

Malaysian accounting standard on asset impairment does not require the separate disclosure of accumulated impairment of asset. In general the standard on property, plant and equipment requires companies to deduct the accumulated depreciation and impairment from the cost of assets to determine the carrying amount of fixed assets. This study examines the determinants of separate disclosure of asset impairment information by Malaysian firms. Specifically, this study examines whether the corporate governance characteristics influence the voluntary disclosure of asset impairment information. We use data from Malaysian public listed companies that disclose asset impairment information in 2013. Based on sample of 298 firm observations we finds that majority of firms choose to present the asset impairment information separately in the annual report. In regression analysis, we find that firms audited by big audit firm are more likely to disclose the asset impairment information separately. The findings suggest that big audit firms encourage better disclosure to reduce information asymmetry between firm management and shareholders. The other corporate governance characteristics are not related with the disclosure of asset impairment information.