Culture, corporate governance and analysts forecast in Malaysia
Abstract
Purpose
The purpose of this paper is to examine the relationship between Bumiputra (in reference to Malay indigenous race) directors, a proxy for culture and analysts forecast. In addition, the study investigates whether corporate governance affects that relationship.
Design/methodology/approach
The sample of this study is based on 664 firm-year observations from 193 firms during the 1999-2009 periods. The authors employ a panel least square regression with both period and industry fixed effects. The authors retrieved of analyst data from the Institutional Broker Estimate System (I/B/E/S) database while the authors hand collected the corporate governance variables. The remaining data were collected from Compustat Global.
Findings
The authors find a positive relationship between the proxy of culture, Bumiputra directors and analysts forecast error suggesting that cultural values influences the level of information in the Malaysian capital market.
Research limitations/implications
The research is dependent on the data availability from I/B/E/S database.
Originality/value
The authors extend the work of Haniffa and Cooke (2002) in investigating how cultural values influence the capital market. In addition, this is the first study that investigates culture values and the analysts forecast.
Keywords
Acknowledgements
The authors would like to acknowledge partial financial support for this research from the Short Term Grant of Universiti Sains Malaysia (304/PPAMC/6310036). In addition the authors would like to thank Janice How and Peter Verhoeven (Queensland University of Technology) for some useful insights.
Citation
Abdul Wahab, E.A., Allah Pitchay, A. and Ali, R. (2015), "Culture, corporate governance and analysts forecast in Malaysia", Asian Review of Accounting, Vol. 23 No. 3, pp. 232-255. https://doi.org/10.1108/ARA-03-2014-0033
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited