Societal Wellbeing Disclosure, Corporate Governance, and Financial Reporting Quality: Evidence from Malaysia

This study examines the relationship between societal well-being disclosure, governance mechanisms, and financial reporting quality (FRQ) among Malaysian listed firms. Using 500 firm-year observations from 2018 to 2022, FRQ is measured using a modified Dechow and Dichev’s accrual quality model. Regression analysis shows that female board representation is the only governance variable significantly associated with improved FRQ. Other governance structures, including board size, independence, audit committee characteristics, leadership separation, and meeting frequency, are not significant. Societal well-being disclosure also does not significantly influence FRQ, suggesting that sustainability reporting remains largely symbolic in Malaysia. These findings extend agency and signaling theory by demonstrating that gender diversity strengthened monitoring and reporting integrity, while also highlighting a gap in legitimacy and stakeholder theory, where societal well-being has yet to influence financial reporting. Practically, the results imply that regulators should strengthen gender diversity initiatives and improve substantive governance practices beyond structural compliance.