Search results

1 – 10 of 13
To view the access options for this content please click here
Article
Publication date: 1 December 2007

Hilwani Hariri, Norshimah Abdul Rahman and Ayoib Che Ahmad

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger…

Abstract

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger would enhance the performance as well as the profession of the merged firms. This research studies the impact of the merger and the price of audit service charged to their clients. The findings showed that there is no significant impact of the merger on audit pricing. The results provide richer understanding of the relationship between organizational structure and pricing in a developing country.

Details

Journal of Financial Reporting and Accounting, vol. 5 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article
Publication date: 3 April 2020

Salau Olarinoye Abdulmalik, Noor Afza Amran and Ayoib Che-Ahmad

This study aims to examine the unique nature of family firms by investigating the moderating effect of chief executive officer (CEO) identity on CEO career horizon and the…

Abstract

Purpose

This study aims to examine the unique nature of family firms by investigating the moderating effect of chief executive officer (CEO) identity on CEO career horizon and the auditor’s client risk assessment. Consistent with literature on family businesses, the level of CEO attachment to socio-emotional wealth (SEW) varies among family businesses.

Design/methodology/approach

This study used a longitudinal sample of 2,063 non-financial family firm-year observations from 2005 to 2016 listed on the Bursa Malaysia. The study used the general method of moments (GMM), which controls for endogeneity concerns.

Findings

The results reveal that, without the moderating effect of CEO identity, the relationship between CEO career horizon and auditor’s risk assessment is positive, which suggests that the auditor’s risk perception of retiring CEOs is very high. However, the interaction of CEO identity reverses the relationship as evidenced by the negative and significant coefficient on the interacted terms. The finding suggests that the auditor’s perceived risk associated with CEO career horizon is lower in family firms with CEOs affiliated to family members or in which the CEO has an equity stake. Overall, the findings provide compelling evidence that the extent of the CEO’s attachment to the firm’s SEW affects the auditor’s client risk assessment.

Practical implications

The findings of the study serve as an enlightenment to policymakers such as Bursa Malaysia and Security Commission that within the family-controlled firms, differences still exist; therefore, there might be a need for future regulatory initiative to cater for the specific need of family-controlled firms.

Originality/value

The study contributes to prior literature by departing from the agency theory adopted in previous studies on auditor choice in family firms under the assumption that family firms are homogenous.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article
Publication date: 6 June 2016

Nosakhare Peter Osazuwa and Ayoib Che-Ahmad

The purpose of this study is to examine the impact of profitability and leverage on the relationship between eco-efficiency and firm value.

Abstract

Purpose

The purpose of this study is to examine the impact of profitability and leverage on the relationship between eco-efficiency and firm value.

Design/methodology/approach

The study extends the Ohlson’s model on value relevance using the hierarchical regression analysis to establish the moderating effects of the firm-specific variables. The sample includes 667 non-financial firms from the Bursa Malaysia, as of 2013. The data for eco-efficiency were extracted from content analysis of the annual report, whereas the financial data were retrieved from the data stream.

Findings

The study provides support for the stakeholder theory that purports that managers must develop a relationship with stakeholders by embarking on environmental friendly practices to maintain a positive firm value. The study shows a positive association between eco-efficiency and the value of the firm and provides support for a positive moderating relationship for profitability in the relationship between eco-efficiency and firm value, whereas there was no significant effect for leverage in the relationship.

Research limitations/implications

It should be noted that, first, the data comprised exclusively Malaysian companies. Including firms from similar developing countries with varying institutional make-up and culture would enhance the understanding of the subject. Second, considering that the data for this study is cross-sectional, it may not be sufficient to draw strong causal influences. The study is the first to the best of the researcher’s knowledge to provide evidence that profitability positively moderates the relationship between eco-efficiency and firm value.

Practical implications

The result shows the management and potential investors that an investment in eco-efficiency will lead to a higher firm value, irrespective of the debt profile of the firm and that profitable firms are more likely to embark on an eco-efficient policy.

Originality/value

This study contributes to the literature by providing evidence from a developing country’s perspective, as well as extending prior studies that merely examined the direct relationship, to now explore the moderating relationship of profitability and leverage in the relationship between eco-efficiency and firm value using a large sample.

Details

Social Responsibility Journal, vol. 12 no. 2
Type: Research Article
ISSN: 1747-1117

Keywords

To view the access options for this content please click here
Article
Publication date: 20 April 2020

Ayoib B. Che-Ahmad, Salau Olarinoye Abdulmalik and Nor Zalina Mohamad Yusof

The present study examines the effect of the chief executive officer (CEO) career horizon (CH) problem on earnings quality (ERN) for selected family-controlled firms known…

Abstract

Purpose

The present study examines the effect of the chief executive officer (CEO) career horizon (CH) problem on earnings quality (ERN) for selected family-controlled firms known to have a unique operational goal.

Design/methodology/approach

The generalised method of moment linear regression model was used on a sample of family-controlled firms in Malaysia from 2005 to 2016.

Findings

The study found a negative relationship between CH and ERN, measured by earnings persistence and earnings predictability. However, in the earnings predictability model, the reverse was found to be the case after interacting CH with CEO family affiliation, CEO experience and CEO equity. However, the use of a reputable auditor could not mitigate the CH problem. Also, the study obtained a closely related result in the earnings persistence model. The result aligns with the socio-emotional wealth (SEW) theory, which states that the goals of family-controlled firms go beyond financial objectives to include other non-financial objectives, and hence, their commitment to perpetuating their dynasty encourages them to preserve the quality of their earnings.

Originality/value

Existing studies on family firms and ERN have treated family firms as homogeneous entities by comparing family and non-family firms, using the underlying theoretical justification of the agency theory. However, this study departs from the agency theory, by considering those factors (i.e. the extent of CEO alignment with family owners and the choice of auditor), using the SEW theory, which establishes the differences among family firms. This work builds on that of Chen et al., (2018) and Ali and Zhang (2015), which suggested that corporate governance can mitigate the CH problem. Therefore, the strength of a CEO's attachment to the family firm (measured by CEO equity ownership and CEO affiliation to family members in family firms) and the choice of the auditor can explain the variation in the effect of the CH problem in family firms.

Details

Asian Review of Accounting, vol. 28 no. 2
Type: Research Article
ISSN: 1321-7348

Keywords

To view the access options for this content please click here
Case study
Publication date: 27 February 2021

Sue Chern Ooi, Siti Seri Delima Abdul Malak and Ayoib Che Ahmad

The main objectives of this case are to provide an opportunity for case users to understand the organisational governance framework in a farmers' association and how to…

Abstract

Learning outcomes

The main objectives of this case are to provide an opportunity for case users to understand the organisational governance framework in a farmers' association and how to build an effective organisational board. More specifically, the teaching objectives of this case are as follows: to provide an overview of the functions of different types of governance structures in a farmers' association. To understand the importance of good governance practices in a farmers' association and for its stakeholders. To relate democratic theory, stakeholder theory, agency theory and stewardship theory with the governance practices of a farmers' association. To critically evaluate the board governance in a farmers' association and recommend measures to enhance the practices.

Case overview/synopsis

The teaching case presents the governance practices in a farmers' association in Malaysia, ZIX-PPK and the various governance challenges that emerged in the PPK subsequent to the appointment of politically affiliated directors. Prior to 2019, ZIX-PPK was an outstanding PPK under the helm of the General Manager, Khadijah. The PPK had continually been recognised as an exceptional and excellent PPK by the Farmers' Organisation Authority and the Muda Agricultural Development Authority. However, the Arahan Pendaftar Bil 1/2019 required changes to the governance structures of ZIX-PPK, with five new directors being appointed by the minister. The appointment threatened the independence and autonomy of ZIX-PPK and affected the dynamic of the board of directors. Khadijah had to search for measures that could improve the board governance in ZIX-PPK. The names, in this case, had been altered but the details were based on an actual event. The data were collected through interviews with key players and with reference to the minutes and other documentation of ZIX-PPK.

Complexity academic level

The teaching case can be used by students in higher education institutions at both undergraduate and postgraduate levels. The case may also be relevant for training purposes to farmers' associations and any non-profit organisations.

Subject code

CSS 1: Accounting and Finance.

Supplementary materials

Teaching notes are available for educators only.

Details

Emerald Emerging Markets Case Studies, vol. 11 no. 1
Type: Case Study
ISSN: 2045-0621

Keywords

To view the access options for this content please click here
Article
Publication date: 3 January 2017

Haseeb-Ur- Rahman, Mohd. Yussoff Ibrahim and Ayoib Che Ahmad

The purpose of this paper is to investigate the relation of corporate governance (CG) attributes, such as separate leadership (SL) structure, independent chair (IC) of the…

Abstract

Purpose

The purpose of this paper is to investigate the relation of corporate governance (CG) attributes, such as separate leadership (SL) structure, independent chair (IC) of the board, and the proportion of independent directors on the board (Bind) recommended by the new Malaysian Code on Corporate Governance (2012), with firms’ market performance measured by share market price.

Design/methodology/approach

The paper uses a randomly selected sample of 150 non-financial Malaysian listed companies. To find the distinct impact of the code, the paper explicitly divides the sample into two-year pre-context (2010-2011) and two-year post-context (2013-2014) of the code. Besides descriptive statistics, the study also employs correlation and multiple regression estimators.

Findings

By comparing the pre-context and post-context of the code, the study found that SL and Bind have a significant positive relation while IC of the board has a significant negative relation with share market price after enactment of the code.

Research limitations/implications

The paper has a limitation of using only two years of data due to its non-availability particularly after enactment of the code. The findings show that the new code slightly improved compliance to the CG attributes investigated. Based on findings, the study also recommends further improvement in compliance to CG codes and other voluntary regulations in Malaysia.

Originality/value

Besides contributing to the limited and incongruent literature in pre-context and post-context of CG regulations, the paper also provides important insights for regulators and policy makers of the emerging markets like Malaysia.

Details

World Journal of Science, Technology and Sustainable Development, vol. 14 no. 1
Type: Research Article
ISSN: 2042-5945

Keywords

To view the access options for this content please click here
Article
Publication date: 10 July 2020

Salau Olarinoye Abdulmalik and Ayoib Che-Ahmad

This study examines the contemporaneous changes in the reporting regime in Nigeria by investigating the effect of regulatory changes on audit fees as well as the…

Abstract

Purpose

This study examines the contemporaneous changes in the reporting regime in Nigeria by investigating the effect of regulatory changes on audit fees as well as the moderating effect of overlapping directorship and financial reporting quality.

Design/methodology/approach

This study utilises a longitudinal sample of 409 firm-year observations, from 2008 to 2013, of nonfinancial companies listed on the Nigerian stock exchange. The study uses the general method of moments (GMM) to control for endogeneity concerns.

Findings

The results reveal that, without the moderating effect of overlapping directorship and financial reporting quality, the relationship between regulatory changes and audit fees is positive but weak, which suggests that regulatory changes drive cost. Similarly, the interaction of overlapping directorship did not reverse the positive relationship, which suggests the perceived risk associated with overlapping directorship. However, the improvement in financial reporting quality reverses the relationship, as evidenced by the negative and significant coefficient on the interacted terms.

Practical implications

This study provides useful insights about committee membership overlap to regulatory authorities concerning the weakness of the monitoring ability of such committees.

Originality/value

The results of this study contribute to the growing literature on regulatory reform, audit fees and corporate governance. Specifically, the study provides empirical evidence on the effect of committee overlap on audit fees, which, to the best of the researchers' knowledge, has received no empirical attention in the Nigerian context.

Details

African Journal of Economic and Management Studies, vol. 12 no. 1
Type: Research Article
ISSN: 2040-0705

Keywords

To view the access options for this content please click here
Article
Publication date: 4 December 2009

Noor Afza Amran and Ayoib Che Ahmad

Most research concentrating on family and non‐family businesses with firm performance is conducted overseas with little research actually taking place in Malaysia. Thus…

Abstract

Most research concentrating on family and non‐family businesses with firm performance is conducted overseas with little research actually taking place in Malaysia. Thus, this study focuses on the relationship between family controlled businesses and corporate governance mechanisms with firm value among Malaysian companies. The sample size of this study is 896 companies that were listed on Bursa Malaysia from 2000 to 2003. The findings reveal that corporate governance mechanisms do have an influence on firm value in Malaysia. However, not all elements of governance mechanisms are significant, and the effects differ between family‐businesses and non‐family businesses. The results indicate as expected that board size and leadership structure affect the firm value for all companies. Further analysis shows that family businesses do practice separate leadership structure whilst board size contributes positively towards better performance in non‐family companies. More importantly, family and non‐family businesses are different in terms of corporate governance practices. Thus, regulators need to give additional attention to the unique setting of the family companies.

Details

Journal of Financial Reporting and Accounting, vol. 7 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article
Publication date: 1 August 2006

Ayoib Che Ahmad, Keith A. Houghton and Nor Zalina Mohamad Yusof

The purpose of this paper is to investigate the extent to which ethnic association (i.e. Chinese and Bumiputra ownerships) and national issues (i.e. the presence of…

Abstract

Purpose

The purpose of this paper is to investigate the extent to which ethnic association (i.e. Chinese and Bumiputra ownerships) and national issues (i.e. the presence of foreign corporations) influence the audit services market in Malaysia. Specifically, the paper aims to examine the effects of ethnicity and foreign ownership on choice of auditor.

Design/methodology/approach

Two logit models are used; the first is to test on ethnic auditor (Chinese/non‐Chinese) choice while the second is related to the choice of quality‐differentiated auditor. The data is obtained from annual reports of the population of the Bursa Malaysia listed companies for both the Main Board and the Second Board for the periods 1993‐1995.

Findings

The logit regressions confirm our prediction of ethnic networking and preferential treatment on the auditor selection process.

Research limitations/implications

The first limitation lies on the auditor choice model where the model is developed from a demand perspective, assuming that the auditors are willing to supply services to any client even though it is very unlikely in the real world. The model also assumes that the audit engagement process for foreign‐controlled companies is purely transacted in the Malaysian market. However, foreign multinational corporations might determine the selection of the auditor at the headquarter offices and the Malaysian subsidiaries might simply be directed to engage a given auditor. Another limitation relates to the results of the logit regressions as the study has documented an ethnic association between auditor and auditee rather than establishing a causal relationship.

Practical implications

An important implication of these findings relates to auditor independence. The Malaysian Institute of Accountants (MIA) has made rules prescribing the code of professional conduct and ethics of public accountants known as the MIA By‐Laws (on Professional Conduct and Ethics) but it seems to neglect the diversity of local culture in addressing independence. Whilst the auditor is divorced from financial and familial interests, the ethnic sentiments might impair auditor independence especially in an audit conflict situation.

Originality/value

The paper provides important insights into the existence of Chinese business practices in Malaysia and auditor selection process in this country.

Details

Managerial Auditing Journal, vol. 21 no. 7
Type: Research Article
ISSN: 0268-6902

Keywords

To view the access options for this content please click here
Article
Publication date: 24 May 2011

Mazlina Mustapha and Ayoib Che Ahmad

The purpose of this paper is to investigate the effect of managerial ownership in relation to agency theory in the Malaysian business environment. In addition to examining…

Abstract

Purpose

The purpose of this paper is to investigate the effect of managerial ownership in relation to agency theory in the Malaysian business environment. In addition to examining the total managerial shareholdings, this study also investigates the association between direct and indirect managerial shareholdings with agency costs.

Design/methodology/approach

The data for the study is obtained from two sources, namely primary (questionnaire) and secondary (annual reports) data. The sample companies are 235 companies listed on Bursa Malaysia for the financial year ended 2006. Multiple regression analysis is used to estimate the relationship between the variables.

Findings

The results of the study indicate that managerial ownership in various segments has an inverse relationship with total monitoring costs as predicted in agency theory. This finding is consistent with earlier studies in western countries and supports the convergence of interest hypothesis.

Originality/value

This study gives a unique contribution to corporate governance studies relating to the effect of ownership structure in relation to agency theory in Malaysian companies, one of the countries in Asia. Previous studies claimed that it is unknown whether the agency theory findings in western countries have equal impact in Asian organizations. Previous literature also indicates that there is a possibility that given the cultural differences, the typical nature of agents in agency theory may not be the case with regard to non‐western countries. Thus, this study provides evidence that support prior research findings in western countries relating to the effect of managerial ownership on the agency relationship which is reflected in its agency costs.

Details

Managerial Auditing Journal, vol. 26 no. 5
Type: Research Article
ISSN: 0268-6902

Keywords

1 – 10 of 13