Earnings and balance sheet conservatism in Malaysia: the influence of IFRS, corporate governance and institutional culture in Malaysia
| dc.contributor.author | MADAH MARZUKI, MARZIANA | |
| dc.date.accessioned | 2015-05-25T07:13:54Z | |
| dc.date.available | 2015-05-25T07:13:54Z | |
| dc.date.issued | 2013-10 | |
| dc.description.abstract | Recently, two important regulatory reforms initiated by the regulators in Malaysia to enhance financial reporting quality among the public listed companies which are the enforcement of IFRS in 2006 and the amendment of Malaysian Code of Corporate Governance (MCCG) in 2007. In spite of the regulative reform, the credibility of these regulations is still questioned by the public and various stakeholders of the companies due to recent corporate failures. Stimulated by this dilemma, this thesis examines the pre and post effects of IFRS enforcement in 2006 and the amendment of MCCG in 2007 on financial reporting transparency measured by conservatism. Further analysis is done by investigating the effect of Malaysia’s institutional culture proxied by political connection, family connection, richest men connection and ethnicity on the relationship between IFRS and MCCG 2007 on conservatism. In this study we use two proxies of conservatism which are earnings conservatism using Basu (1997)’s model and balance sheet conservatism using Lara (2004)’s model. Earnings conservatism is used as the best measure of financial reporting transparency as this concept requires a higher degree of verifications for profits compared to losses based on the news from stock prices whereas balance sheet conservatism is used as a poor financial reporting quality as it merely understate profits and overstate losses without any indications. It is hypothesized that earnings conservatism increases whereas balance sheet conservatism decrease after the IFRS and MCCG 2007. We also hypothesized that earnings conservatism is decreasing xviii and balance sheet conservatism increasing even after the IFRS and MCCG as a result of Malaysia’s institutional culture. Based on a final sample of 3,083 observations from listed companies on Bursa Malaysia from year 2004 till 2009, it was found that earnings conservatism is enhanced after IFRS and MCCG whereas poor financial reporting quality (balance sheet conservatism) is also reduced after IFRS and MCCG. There was mixed findings for results on institutional culture. Politically connected firms are not conservative; either in earnings or balance sheet conservatism. Enhanced earnings conservatism after IFRS and MCCG 2007 provided evidence that family firms have less incentive to manage earnings since they have long interest with the firms. The results for richest men provided evidence that richest men connection lead to poor financial reporting quality as balance sheet conservatism is enhanced after IFRS. In addition, it was found that conservatism is not depend on ethnicity per se. The study provide insight to the regulators to formulate accounting policies that will take into consideration Malaysia’s institutional culture as some of the culture might trigger financial reporting quality in this country. Since the literatures on balance sheet conservatism are scarce, this study also extends the literature on balance sheet conservatism and thus enhances the understanding on the role of conservatism in financial reporting transparency. | en_US |
| dc.identifier.uri | http://hdl.handle.net/123456789/722 | |
| dc.subject | Balance Sheet | en_US |
| dc.title | Earnings and balance sheet conservatism in Malaysia: the influence of IFRS, corporate governance and institutional culture in Malaysia | en_US |
| dc.type | Thesis | en_US |
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