Determinant Factors Affecting Quality of Reporting in Annual Report of Malaysian Companies
Annual report is one form of communication between managers and stakeholders. Therefore, quality of reporting in annual reports has to be taken into consideration to enable users to make informed decisions. This research investigates factors that influence the quality of reporting in annual reports for the year of 2004 by Malaysian companies. Specifically, this study examines the relationship between quality of reporting with quality of earnings and ownership structure. Agency theory is used as a basis for the study. Quality of reporting is measured using disclosure index, whilst earnings quality is measured by discretionary accrual. The three types of ownership studied are managerial ownership, block ownership and government ownership. The results show that ownership structures (managerial and government) affect quality of reporting in annual reports. Further analysis shows that companies that report lower earnings disclose more voluntary information in the annual report compared to companies that report higher earnings. This study provides further evidence on factors that affect quality of disclosure in the East Asian region and contributes to the development of disclosure index for Malaysian companies.

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