Disclosure choices, corporate characteristics and compliance with IFRS practice statement management commentary: An empirical study of Malaysian listed companies

The purpose of this study is to investigate the extent to which Management Commentary section in the annual reports of listed companies in Bursa Malaysia fulfils compliance requirements of IFRS's Practice Statement of 2010. Using a sample of 100 largest companies, we constructed a disclosure index from the annual reports, and used multiple regression to analyse data. The results indicate that the compliance with the Practice Statement is low as the compliance levels range from the low of 22% to the high of 67% with an average disclosure of 47.4%. The compliance pattern suggests that most firms, on average, place greater emphasis on disclosures regarding the internal workings of the firm but less so on the external factors and influences. We also report that firm profitability, institutional ownership, age of the firm, and consumer industry are the main determinants of Management Commentary disclosures in the Malaysian context.