Antecedents of company secretaries’ behaviour and their relationship and effect on intended whistleblowing

Author:Yeo Chu May-Amy, Loke Yew Han-Rashwin, Steve Carter
Publication Date:21 May 2020
Antecedents of company secretaries
behaviour and their relationship and effect
on intended whistleblowing
Yeo Chu May-Amy, Loke Yew Han-Rashwin and Steve Carter
Purpose This study aims to examine the antecedents of company secretaries’ behaviour and their
relationshipand effect on intended whistleblowingwith the role of neutralisationas a moderating factor on
an individual’sethical decision-making in whistleblowing.
Design/methodology/approach Using a modified version of the theory of planned behaviour as a
framework and a quantitative researchapproach, a Likert-type scaled, self-administered questionnaire
was conducted on a non-probability sample, totalling 208 company secretaries, currently working for
various consultancy, audit and secretarial firms in Malaysia. The data obtained were analysed through
structuralequation modelling.
Findings Findings indicated that attitude, subjective norm, perceived behavioural control, ethical
obligation as well as self-identity were found to be predictors in a company secretary’s intended
behaviour to whistle-blow. However, neutralisation was proved not to be a contributing factor in
whistleblowingbetween intention and behaviour.
Research limitations/implications The quantitative measures of intention and behaviour are
incompatible based on their levelsof specificity or generality. Also, there may be an existence of social
desirabilitybias among the respondents, indicatingthe need for a wider sample.
Practical implications The study offers valuable knowledge by providing organisations and
regulators with several insights into improving the company secretaries’ whistleblowing behaviour,
including the need to strengthen whistleblowers’ support and alleged malpractice investigation and
analysis systems.It also enables company directors and regulatorsto implement whistleblowing policies
as an internal control mechanism, thus realising an individual’s intention to highly engage in
Originality/value To the best of the authors’ knowledge,this study represents the first research that
has empiricallytested the relationship and effect of antecedentsof company secretaries’ whistleblowing
intention and behaviourusing a modified version of the theory of planned behaviour, thus addingto the
stock of literature on this topic and showing that ‘‘neutralisation’’ had an insignificant effect on the
possibilityof fraudulent reporting.
Keywords Company secretary, Corporate governance, Whistleblowing, Theory ofplanned behaviour,
Paper type Research paper
1. Introduction
The issue of ethical breaches has attracted wide attention globally over the past several
decades (Ghani et al.,2011;Zandstra, 2002;Vinten, 2002). In particular, widely quoted
ethical breaches were evident in some US-based companies in the early years of the 21st
century, including Enron, WorldCom andTyco which collapsed because of the discovery of
accounting scandals (Mesmer-Magnusand Viswesvaran, 2005) with more recent corporate
crises involving some large US investment companies such as Wells Fargo and Equifax
(Tayan, 2019). Issues came to light because employees of these companies had taken
Yeo Chu May-Amy and
Loke Yew Han-Rashwin are
both based at the Faculty of
Accounting, Finance and
Business, Tunku Abdul
Rahman University College,
Kuala Lumpur, Malaysia.
Steve Carter is based at
Edinburgh Business
School, Heriot-Watt
University, Edinburgh, UK.
Received 8 October 2019
Revised 20 January 2020
21 April 2020
Accepted 27 April 2020
DOI 10.1108/CG-10-2019-0308 VOL. 20 NO. 5 2020, pp. 837-861, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 837
action and believed that any misconduct committed by the company should be
communicated to the relevant authorities to take corrective action (Mesmer-Magnus and
Viswesvaran, 2005;Nawawi and Salin, 2018). This action is best known as “whistleblowing”
(Dozier and Miceli, 1985;Mustapha and Siaw, 2012). The collapse of several big
companies, because of unethical practices as well as the resulting effect of huge
investment, financial and job losses, triggered governments to strengthen the focus of its
regulatory reforms, an example being the SarbanesOxley Act, 2002[1], which was enacted
in the USA with an aim to prevent the recurrence of such behaviours (Eaton and Akers,
2007;Sorensen and Miller, 2017). Likewise, a similar situation also appeared in many Asian
countries, including Malaysia(Ghani et al.,2011;Okpara, 2011).
These grave issues and high-profile corporate scandals involving fraud and
mismanagement that occurred in Malaysia, triggered the government to intervene and
implement measures to achieve a more transparent business environment (Zaleha et al.,
2014). This included strengthening and reinforcing governance, as well as laws and
regulations that not only dealt with unbridled ambition and shameless greed of senior
executives or officers but also to encourage whistleblowers to stand their ground and
report, supported and encouraged by whistleblower protection (Lee, 2011;Mustapha and
Siaw, 2012;Leong, 2017). This could be interpreted as the government viewing
whistleblowing as an imperative means,promoting accountability, internal control and a risk
management tool for protectingthe organisations as well as public interest (Anwar, 2003).
The first of these efforts was the enactment of several preliminary legislative provisions
authorising certain individuals to whistleblow, namely, accountants, auditors, secretaries
and advisors, pursuant to the Malaysia Companies Act (1965), Capital Market and Services
Act (2007; section 321), Securities Industry Act (1983; section 99F) and Malaysia Anti-
Corruption Commission Act (2009; section 29). In moving towards a more healthy
organisational environment, the Malaysian government has introduced the new Companies
Act (2016) which covers not only a wide range of responsibilities to be performed but also
the role of an officer in the performance of their duties as a whistleblower, as well as the
protection granted to safeguardthe whistleblower from his or her whistleblowing action (see
section 587 of CA 2016). In spite of that, the act merely covers the occurrence aspect of
whistleblowing within the publicand private companies in Malaysia. Essentially, the broader
Whistleblower Protection Act that was introduced in 2010 provides more extensive
coverage on the whislteblower role, as well as the necessary protection to safeguard
informants so as to motivate more people to come forward rather than remain silent in fear.
Moreover, along with the newly issued Malaysian Code on Corporate Governance on 26th
April 2017 by the Securities Commission (SC) of Malaysia, best practices and
recommendations were set out to strengthen good business practices and to maintain a
healthy corporate culture underpinned by accountability, integrity, transparency and
fairness. Not surprisingly, the code also covered the functionality and enhancement of
whistleblower responsibilities, the avenues of reporting and an objective investigation and
resolution of legitimate reportingconcerns (see Guidance 3.2 of the code).
This research aims at extending the application of the modified theory of planned behaviour
(TPB) to the study of ethical or prosocial behaviour whistleblowing, to better understand
which individuals behave in which way. This study also incorporates the neutralisation
construct into the modified TPB model to determine whether rationalisations and
justifications could affectan individual propensity to whistle-blow.
There is a wide body of literature on whistleblowing behaviour (WB) in the accounting or
audit discipline (Carpenter and Reimers, 2005;Alleyne et al., 2013;Trongmateerut and
Sweeney, 2013;Rustiarini and Sunarsih, 2017;Latan et al.,2018;Alleyne et al.,2019) and
other professions, such as nurses (Randalland Gibson, 1991), defence ground forces (Ellis
and Arieli, 1999), police officers (Park and Blenkinsopp, 2009;Zakaria et al.,2016)and
supervisors (Ghani et al.,2011). However, to the best of our knowledge, the phenomenon of

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