Nor Farizal Mohammed, Norhayati Mohamed, Ruhaya Atan, Jamaliah Said,
Financial transparency is useful for decision making and effective resource allocations. The information must be reliable and disseminated in a timely manner to stakeholders. Transparency is one of the targets in Sustainable Development Goal (SDG) 16, which aims for peace, justice, and strong institutions. A large amount of public spending has been allocated to public universities; often, however, the decision made in allocating funds is not based on financial statements. This approach may contribute to inefficiency in public spending. This study adopts resource dependency theory to explain this phenomenon. The objective of this study is to examine financial transparency by focusing on current and liability ratios among public universities in Malaysia. The specific characteristics of the universities are examined using regression analysis. Data are obtained from the financial statements of 20 Malaysian public universities (MPUs) from 2015 to 2018. The principal finding of this study is that current ratios in Malaysia’s public universities are high, giving the impression that a large amount of liquid public resources is in public universities. However, further investigation reveals that most public universities in Malaysia classify the whole amount of deferred grants as a non-current liability. The findings also show that debt ratios are high, which implies the slow amortization of government grants in MPUs. These practices jeopardize the quality of financial statements and affect the financial transparency of MPUs, hinting at the state of the path toward SDG 16. This result is in line with the argument by resource dependency theory that organizations are connected to the environment via their dependency on other organizations for many resources. This research has practical implications by offering recommendations to enhance the financial transparency and decision-making process for public universities toward achieving SDG 16 and by contributing to the current literature on public sector accounting.