Market risk disclosure: evidence from Malaysian listed firms

Abstract

Purpose

The purpose of this paper is to investigate the market risk disclosure practices among Malaysian listed firms. Specifically, it aims to examine the level of compliance with FRS132: Financial Instruments – Disclosure and Presentation for financial periods beginning or after 2006.

Design/methodology/approach

The approach taken is content analysis and coding procedure.

Findings

Although a large number of companies have shown compliance with FRS132 in relation to disclosing the financial risk management policy, there are systematic differences across companies in terms of level of details (i.e. qualitative and quantitative) disclosure. Interest rate disclosure was the most mentioned category and the credit risk was the least mentioned category of market risk. There is telling evidence that most Malaysian firms did not engage in hedging any type of market risk over the reporting period of 2006‐2007.

Research limitations/implications

There is a need for some standardized risk reporting format to achieve greater financial transparency to make investors aware of the market risks.

Originality/value

This is believed to be the first study to provide survey findings on the use of derivatives instruments by listed firms in Malaysia.

Citation

Othman, R. and Ameer, R. (2009), "Market risk disclosure: evidence from Malaysian listed firms", Journal of Financial Regulation and Compliance, Vol. 17 No. 1, pp. 57-69. https://doi.org/10.1108/13581980910934045