Corporate Governance And Accounting Quality In Malaysia
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Date
2014-02
Authors
Ooi, Chee Keong
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Malaysia faces increased competition from countries in the region and from
emerging economies such as India and China in attracting investors. It is not just the
natural resources, quality of labour force and political stability that attract investors
to its shores. Equally important is the accounting quality, its reliability, transparency
and corporate governance. Therefore, the main objective of this research is to
examine the changes in accounting quality before and after the implementation of
Financial Reporting Standards (FRS) on January 1, 2006. This research also
examines the relationship between various governance mechanisms of board
structure, audit committees and accounting quality in Malaysia. This study will be
conducted by using the entire main board public-listed companies (PLCs) as
population for the year of 2003 to 2008 in order to obtain the sufficient samples for
analysis. The final sample for this study comprised 397 non-financial companies
with complete data for accounting quality and corporate governance variable. The
overall results in this study find that accounting quality has reduced in terms of
higher earnings management and lesser timely loss recognition during the post IFRS
and post MCCG period. Furthermore, the results also suggest that corporate
governance attributes of governance expertise in board committee, directors’
ownership, role duality or chairman independence, audit committee financial
expertise, audit committee independence are associated at significant levels with
accounting quality during the post IFRS and post MCCG period. Its results are
useable by stock market participants in their evaluation of the roles of corporate
governance and ownership structure in enhancing the quality of reported earnings.
The findings will also help regulators to define effective corporate governance
attributes and to assess the requirements for disclosure of corporate governance
practices in future.
Description
Keywords
Corporate Governance , Accounting Quality