› › The Impact Of Corporate Governance And Real Earnings Management On Financial Statement Fraud In Malaysia

The Impact of Corporate Governance and Real Earnings Management on Financial Statement Fraud in Malaysia

Author : Noorul Azwin

Publisher :

Page : 21 pages

File Size : 16,87 MB

Release : 2014

Category :

ISBN :

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Book Description

This study examines the relationship between corporate governance mechanisms and financial statement fraud in Malaysia. This study also investigates the likelihood of Malaysian financial statement fraud firms' involvement in real earnings management. Although a number of firms submitted fraudulent financial statement each year to deceive financial statement users in decision making, limited studies have been undertaken on financial statement fraud in emerging countries. This study will fill the research gap by examining the relationships between financial statement fraud, corporate governance and real earnings management. In the end, this study will make a significant contribution for regulators to make policies and analysts to identify early warning signals with regard to fraudulent financial reporting practices in Malaysia. Univariate and multiple regression models will be employed to test the hypothesized relation between firms convicted in financial statement fraud and corporate governance practices. This study will incorporate ethnic attribute on the board and audit committee. This study will also investigate changes towards corporate governance practice after fraud detection. To the best of the researcher's knowledge, no research has investigated pre and post corporate governance practices in related to financial statement fraud at the same time. Abnormal real earnings management will be used as the proxy for earnings management. Prior literatures have focused on accounting accruals to proxy earnings management. Nevertheless, past literatures documented that it is more favourable for managers to manipulate monetary values that involve with the timing of actual business transactions. It is also posited that real earnings management occurs before manipulation of accruals. As a result, the decision to use real earnings management in identifying early warning signal of financial statement fraud is appropriate. Potential findings of this study are the effective corporate governance mechanisms able to reduce fraudulent financial reporting. Furthermore, earnings quality is expected to decline towards the conviction of financial statement fraud.





Management Predisposition, Motive, Opportunity, and Earnings Management for Fraudulent Financial Reporting in Malaysia

Author : Suhaily Hasnan

Publisher :

Page : 49 pages

File Size : 32,48 MB

Release : 2009

Category :

ISBN :

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Book Description

This study examines two issues relating to fraudulent financial reporting in Malaysia. The first issue examines factors involved with fraudulent financial reporting practices; i.e. predisposition (i.e. related party transactions, history of prior violations, founders on board), motive (i.e. economic factor, ownership factor, political factor) and opportunity (i.e. poor corporate governance). Then, the second issue looks into the relationship between earnings management and the occurrences of fraudulent financial reporting. The study uses a matched sample of 47 firms that were convicted of issuing fraudulent financial statements during the period from 1996 to 2006. Our results show that firms with fewer related party transactions, higher number of prior violations, and higher proportion of founders on board are more likely to quot;tipquot; over the edge into fraudulent financial reporting. We also find that the corporate environment most likely to lead to fraudulent financial reporting is characterized by accounting practices that are already quot;pushing the envelopequot; on earnings management. Furthermore, we find that firms are embroiled in fraudulent financial reporting when non-family and non-foreigners own the company, and when the level of financial distress is high. As expected, our results also show that firms involved in fraudulent financial reporting have significantly poor corporate governance structures whereby the audit quality is lower and outside directors seem overcommitted. However, we find no evidence that firm's political connection factor or the level of board independence play a significant role in the potential for fraudulent financial reporting.





Contemporary Issues in Financial Reporting, Auditing and Corporate Governance (UUM Press)

Author : Noor Afza Amran

Publisher : UUM Press

Page : 198 pages

File Size : 45,13 MB

Release : 2013-01-01

Category : Business & Economics

ISBN : 9670474566

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Book Description

Contemporary Issues in Financial Reporting, Auditing and Corporate Governance offers theoretical and empirical background on three fundamental areas of accounting, namely financial reporting, auditing and corporate governance. This book is written in a clear and reader-friendly manner to create readers’ interest in the central issues of discussion. The uniqueness of this book is in its extensive coverage of national and internationally-oriented issues of financial reporting, auditing and corporate governance. This book is ideal for accounting and business related courses at upper undergraduate and post-graduate levels. With its broad coverage, the book should also be of interest to academicians, professionals, corporate managers, regulatory bodies and researchers.



Introduction to Earnings Management

Author : Malek El Diri

Publisher : Springer

Page : 120 pages

File Size : 28,44 MB

Release : 2017-08-20

Category : Business & Economics

ISBN : 3319626868

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Book Description

This book provides researchers and scholars with a comprehensive and up-to-date analysis of earnings management theory and literature. While it raises new questions for future research, the book can be also helpful to other parties who rely on financial reporting in making decisions like regulators, policy makers, shareholders, investors, and gatekeepers e.g., auditors and analysts. The book summarizes the existing literature and provides insight into new areas of research such as the differences between earnings management, fraud, earnings quality, impression management, and expectation management; the trade-off between earnings management activities; the special measures of earnings management; and the classification of earnings management motives based on a comprehensive theoretical framework.



Corporate Payout Policy

Author : Harry DeAngelo

Publisher : Now Publishers Inc

Page : 215 pages

File Size : 27,34 MB

Release : 2009

Category : Corporations

ISBN : 1601982046

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Book Description

Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.



Earnings Management and Corporate Governance. An Investigation OfFinancial Statement Reporting of Publicly Listed Companies in Nigeria

Author : Ademola Akinteye

Publisher :

Page : 868 pages

File Size : 34,34 MB

Release : 2019-10-22

Category :

ISBN : 9783346078728

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Book Description

Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measur



Corporate Governance and Earnings Management in Malaysian Government Linked Companies

Author : Muslim Har Sani Mohamad

Publisher :

Page : pages

File Size : 18,72 MB

Release : 2014

Category :

ISBN :

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Book Description

As the major shareholder, in 2004, the Malaysian Government embarked on the transformation initiative of the Government Linked Companies (GLCs). One of the main initiatives was to enhance board effectiveness through its Green Book. Soon after, the progress performance review revealed that the GLCs reported improved earnings. Such drastic performance turnarounds triggered the question as to whether earnings quality is at stake. The purpose of this paper is to examine the impact of the tightening of corporate governance mechanisms on earnings management (EM) activities of the GLCs. The earnings data for two periods (pre- and post-transformation) were collected and tested to determine whether the GLCs experienced any improvement of board monitoring role in curbing EM activities in the post-transformation period. The main findings show that there is an increase of EM activities in the post-transformation policy. Furthermore, the study also reveals that none of the corporate governance mechanisms has much impact on curbing activities, except for board meetings and leadership structure in the post-transformation period. The board meetings and separation of chairman and chief executive officers in the companies were shown to only have a negative impact on EM activities in the post-transformation period. Although the study has shown a positive preliminary impact from tightening the corporate governance of the GLCs, weak earnings quality might undermine the efforts to sustain such a transformation. The paper contributes to the limited body of literature concerning the impact of corporate governance on earnings management by examining such impact using Government Linked Companies in Malaysia after introducing the transformation programme.