Reforming Corporate Governance in Malaysia to Address Fraudulent Financial Reporting Cases

Abstract

Fraudulent Financial Reporting has become an issue of great concern throughout the world. It is a global phenomenon which has attracted attention of the business and financial community, regulatory bodies and the public. It is harmful in many ways. As a result, various mechanisms have been introduced to mitigate the occurrence of fraudulent financial reporting case. In Malaysia, the Malaysian regulatory authorities have designed various controls and undertaken all kinds of actions and reforms to mitigate the occurrence of fraudulent financial reporting case, to enhance the integrity of the capital markets and to restore investors’ confidence. The most important one is the reform of Malaysian Code of Corporate Governance (MCCG) which emphasizes on the role of audit committee and external auditor in an organization. Such a committee should possess certain characteristics in order for it to function effectively. From previous studies, it is apparent that not many researches have been conducted into examining the reform of corporate governance in Malaysia. Hence, the purpose of this study is to examine the reform that has been undertaken by the Malaysian regulatory authorities from 1998 until 2012.