The effects of governance mechanisms on organisational accountability of Malaysian statutory bodies / Nurhidayah Yahya

Various accountability issues concerning Malaysian statutory bodies had been disclosed by multiple parties in their reports, especially the Auditor General Report. These issues tarnished statutory bodies’ reputations and impeded public trust and satisfaction. Hence, accountability must be upheld and achieved, contributing to economic performance and good public services. Considering this, in light of the social contract theory, governance mechanisms were observed to help organisations achieved accountability. Four variables were identified as governance mechanisms that positively impact accountability: internal control systems, corporate integrity practices, human resource management, and transformational leadership. Furthermore, according to the social contract theory, corporate integrity practices could strengthen the governance relationship on accountability, hence further acted as the moderating variable. Therefore, this study examined the relationship of all four variables with accountability and examined whether corporate integrity practices could strengthen the relationship of the internal control systems, human resource management, and transformational leadership with accountability. Primary data of questionnaire distribution was applied. Before distribution to respective respondents, pre-test and pilot tests were conducted for questionnaire validity and reliability assessment. As this study was organisational level, the questionnaires were distributed to the representative of each statutory body, who was the CEO. The questionnaires were distributed to all 291 Malaysian federal and state statutory bodies. 195 responses were successfully gathered; 194 were usable. Data were coded and analysed for descriptive analysis using SPSS, while hypotheses testing were done by adopting PLS-SEM approach using the SmartPLS software. The results found that all four variables positively and significantly affected accountability. However, the internal control systems’ relationship with accountability was negative and significant for moderating effect results. On the other hand, human resource management and transformational leadership’s relationship on accountability showed no effects and were not significant when interacted with corporate integrity practices. This signalled that corporate integrity practices directly contributed to further improvisation of accountability, but it did not moderate other relationships. This might be due to a solid internal control system, human resource management and transformational leadership established and implemented in statutory bodies, which did not affect their relationship towards accountability, although with corporate integrity practices interaction. As for moderation for the internal control systems might indicate that too many rules, where internal control systems regulations and corporate integrity practices to be followed, could cause tension to obey and further negatively impacted the accountability. The study’s practical implication was between those four governance mechanisms, transformational leadership was found to require further improvement. Nevertheless, though interaction with corporate integrity practices was not significant and not in line with social contract theory, corporate integrity practices were crucial to be implemented and practised in statutory bodies. The study also contributed to the social contract theory where in developing countries, the findings might not be the same as in developed countries that had well-established integrity culture. Further contributions, limitations and recommendations for future studies were also discussed.