Exploring the Effects of Board Characteristics on Innovation Capital Disclosure: Evidence from Malaysia

Nur Hani Othman, Azwan Abdul Rashid, Norhayati Mat Husin

Innovation is one of the major determinants for competitive advantage and long-term success for business growth. As a result, there is an increased demand for information on innovation activities of firms among stakeholders. The main objective of this research is to investigate whether board characteristics influence the disclosure of innovation capital in the Malaysian public listed companies. The sample consists of 68 public listed companies in the Main Market of Bursa Malaysia over a five-year period from 2011 to 2015. The research employs content analysis methodology to measure the extent of the innovation capital disclosure in the annual report. The multiple regression analysis is then used to investigate the relationships between five board variables and innovation capital disclosure. In general, the extent of innovation capital disclosure indicates an increasing trend in the sample years. The result also reveals that there are significant differences between categories of innovation capital disclosure, with external capital identified as having the highest disclosure. The multiple regression results provide evidence that all five board variables were significantly associated with innovation capital disclosure. Board size, board independent, foreign directors, board meeting, and director age are related to the extent of innovation capital disclosure.