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Article
Publication date: 13 February 2017

Azhar Abdul Rahman and Mohd Diah Hamdan

The purpose of this paper is to investigate Malaysian companies’ compliance with mandatory accounting standards. Specifically, this study examines the efficacy of…

Abstract

Purpose

The purpose of this paper is to investigate Malaysian companies’ compliance with mandatory accounting standards. Specifically, this study examines the efficacy of agency-related mechanisms on the degree of compliance with Financial Reporting Standards (FRS) 101, Presentation of Financial Statements. It so proceeds by focussing on corporate governance parameters (board characteristics and ownership structure) and other firm characteristics.

Design/methodology/approach

Using data drawn from a sample of 105 Malaysian companies listed on the ACE market in 2009, the authors employ multiple regression analysis models to establish whether selected corporate governance and company-specific characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance.

Findings

The results indicate that the overall disclosure compliance is high (92.5 per cent). Furthermore, only firm size is positively associated with the degree of compliance. The other variables, those consisting of board independence, audit committee independence, CEO duality, the extent of outside blockholders’ ownership and leverage, do not show any significant relationship with the degree of compliance.

Research limitations/implications

This study focusses on only one accounting standard (FRS 101) that is mandatory in Malaysia. FRS 101 is both structured and rigid, leaving no room for companies to conceal any particular information. The sample of Malaysian companies selected is restricted to those listed only on the ACE market. As such, the results cannot be generalised to every company in Malaysia.

Practical implications

These results have important implications for policy makers because they suggest that whilst agency-related mechanisms may motivate compliance with mandatory standards, full compliance may be unattainable without regulations.

Originality/value

This is the only study in Malaysia to investigate the impact of regulatory requirements on corporate compliance level by companies listed on the new ACE market, which was introduced by the Bursa Malaysia in August 2009. This study contributes to the literature by examining the effects of both company-specific characteristics (such as company size, company age, liquidity, etc.) and corporate governance parameters on the degree of corporate compliance with mandatory disclosure, simultaneously, in contrast with prior studies which have examined them in isolation.

Details

Journal of Applied Accounting Research, vol. 18 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 24 April 2020

Malek Hamed Alshirah, Azhar Abdul Rahman and Ifa Rizad Mustapa

This study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality…

Abstract

Purpose

This study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality and board expertise) on these practices in the Jordanian context. This study also adds to the body of literature by examining the moderating effect of family ownership on the relationship between the board of directors' characteristics and the corporate risk disclosure.

Design/methodology/approach

The sample of this study contains the non-financial Jordanian firms listed on Amman Stock Exchange (ASE). 376 annual reports of the sampled firms over four years from 2014 to 2017 were used. The content analysis approach was used to collect data and to determine the level of risk disclosure by computing the number of risk-related sentences in the annual reporting. To test the study's hypothesis, the random effect model was employed.

Findings

The empirical results show that the total of the risk disclosure sentences for each firm ranges from a minimum value of 2 sentences to a maximum value of 61 sentences, and the mean of CRD is 28 sentences. The results also indicate that the board expertise is positively related with the level of risk disclosure. Conversely, CEO duality has a negative impact on the risk disclosure practices. However, the results failed to support that the board size and the board meetings have a significant effect on the level of risk disclosure. Furthermore, the study demonstrated that the family ownership moderates the relationship between the board of directors and the corporate risk disclosure.

Practical implications

The finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.

Originality/value

The current study contributes to the literature of risk disclosure because the previous research has paid little attention to this topic in Jordan. To the best knowledge of the researcher, this study is the first Jordanian study that focuses on examining the relationship between the board of directors' characteristics and the corporate risk disclosure in the non-financial sector. Furthermore, it is the first study that examines the moderating role of family ownership on such relationships. Consequently, the results of the current study draw attention to the CRD practices and the monitoring role of board of directors in Jordan.

Details

EuroMed Journal of Business, vol. 15 no. 2
Type: Research Article
ISSN: 1450-2194

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Article
Publication date: 22 October 2018

Abdullah Hamoud Ismail, Azhar Abdul Rahman and Abdulqawi Ahmed Hezabr

This study aims to identify factors that influence corporate environmental disclosure (CED) quality.

Abstract

Purpose

This study aims to identify factors that influence corporate environmental disclosure (CED) quality.

Design/methodology/approach

Using content analysis, an index and scoring scheme were applied to annual reports, stand-alone reports and corporate homepages of a sample of 116 oil and gas companies in 19 developing countries (DCs).

Findings

The results of this study reveal that out of 12 hypothesized variables, only 5 variables (company size, foreign ownership, profitability, leverage and membership of industry’s associations) are positively related to the CED quality.

Practical implications

The study has implications in enhancing the understanding of CED practices by oil and gas companies in DCs and the factors that influence the quality of such disclosure. Thus, the results of the study serve as input toward the development of improved regulations concerning CED for the oil and gas industry and provide guidelines to the regulators to make relevant decisions on social and environmental information items to be incorporated in the regulatory standards.

Originality/value

The current study attempts to fill the gaps in the literature by examining CED quality (rather than its quantity), concentrating on environmental disclosure made on the three main mediums of reporting. The study also extends previous research of CED by investigating some factors that have the potential to influence the content-quality of environmental disclosure, such as type of company (independent or constrain company) and industry’s association membership which have never been examined in the related literature.

Details

International Journal of Ethics and Systems, vol. 34 no. 4
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 1 February 2001

Azhar Abdul Rahman

This study examines the use and perceived importance of annual reports by accountants in Malaysia. Using a postal questionnaire survey, the study focuses on (i) the range…

Abstract

This study examines the use and perceived importance of annual reports by accountants in Malaysia. Using a postal questionnaire survey, the study focuses on (i) the range of purposes for which respondents use financial reports; (ii) the relative position of annual reports as a source of information compared with other sources of information; and (iii) the relative importance of different parts or sections in a company's annual report. The results indicate that advising clients appears to be their main use of annual reports whereas the least cited reason is to negotiate labour contracts. In addition, advisory services, annual reports, and prospectuses are perceived to be the most important sources of information. The profit and loss statement is also perceived to be the most important part of an annual report, followed by the balance sheet and the notes to accounts. The research findings are, to some extent, consistent with the results of similar studies done in developed as well as developing countries.

Details

Asian Review of Accounting, vol. 9 no. 2
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 17 August 2015

Abdullah Awadh Bukair and Azhar Abdul Rahman

The purpose of this paper is to examine the relationship between board structure (consisting of board size, board composition, CEO role duality and chairman composition)…

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Abstract

Purpose

The purpose of this paper is to examine the relationship between board structure (consisting of board size, board composition, CEO role duality and chairman composition), investment account holders (IAHs) and social contribution and the bank performance in one of the fastest-growing industries, Islamic banking.

Design/methodology/approach

A generalized least square (GLS) regression model was used to investigate such relationship applying data from a sample of 40 Islamic banks operating in Gulf Cooperation Council (GCC) countries over the period of 2008 until 2011.

Findings

The results show that both size and composition of the board have a negative effect on bank performance. On the other hand, the separation of CEO and chairman roles and the IAHs have no effect, while the chairman independence has a positive impact. As for the control variables, bank size positively influences bank performance whereas leverage has a negative effect. Zakah and gross domestic product produce no significant effect on bank performance.

Research limitations/implications

Even though the model has explained the significant part of the variation in performance, there are other factors considered as noise in the model which are unexplained due to the lack of data. As such, other mechanisms of corporate governance (CG) comprising attributes of the remuneration and nominating committees and ownership structure may be used in future research. The sample size is also limited; thus, in future research, the sample size could be increased by including Islamic banks operating in all Middle East countries.

Practical implications

The results suggest that to yield a better bank performance, Islamic banks should enhance the effectiveness of CG through the board of directors (BODs), whereby any decisions made by the BODs would lead to greater investors’ confidence in the market. The results suggest that policymakers should impose new mechanisms that could impact the effectiveness and compliance of BODs on the code of CG and guidelines of micro-finance, in general, and among Islamic banks, in particular. The community also has the right to know up to what extent are the Islamic banks are in compliance with Shariah principles and rules and the impact of their transactions on the society’s welfare.

Originality/value

BODs’ failures are the primary reason for the recent financial collapses, and Islamic banks are not spared from these events. Even though many studies have examined the influence of BODs effectiveness on the performance of conventional banking industry over time, studies on the Islamic financial institutions are quite scarce. In addition, the results obtained by the studies on conventional banks may not be applicable to Islamic banks. This is because the BODs of Islamic banks discharge their responsibilities and duties along with the existence of the Shariah supervisory board (a multi-layer structure), which is quite different from the CG structure in conventional banks that is dependent on the BODs (a single-layer). Therefore, this research attempts to fill the gap in the literature by addressing this issue in the Islamic banking industry by using a stakeholder theory based on Islamic perspective which has not been used yet in previous studies.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 8 no. 3
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 31 August 2010

Azhar Abdul Rahman, Mohd Azlan Yahya and Mohd Herry Mohd Nasir

The purpose of this paper is to compare the criteria used among Islamic Indices, specifically between the Kuala Lumpur Stock Exchange Shari'ah Index (KLSESI) and the Dow…

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4101

Abstract

Purpose

The purpose of this paper is to compare the criteria used among Islamic Indices, specifically between the Kuala Lumpur Stock Exchange Shari'ah Index (KLSESI) and the Dow Jones Islamic Market Index (DJIM) in screening a permissible company for investment purposes. The two controversial criteria examined are: level of debt and level of liquidity of company.

Design/methodology/approach

The paper investigates the 642 companies listed on the Bursa Malaysia in 2006 as approved Shariah's compliant companies by the Shari'ah Advisory Council of the KLSE.

Findings

Overall, the results reveal that the KLSESI does not use both the criteria set by the DJIM as its measures during the screening process. As for the level of debt criterion, the results show that 44.07 percent of the companies listed under the KLSESI are highly geared. These companies depend heavily on debt to finance their capital. However, the results for the level of liquidity criterion are not as extreme as the level of debt where it shows only 17 percent of the companies listed under the KLSESI are highly liquid. The results also indicate that if both criteria are compared concurrently, only 198 out of 565 companies listed under the KLSESI conform to the criteria set up by the DJIM.

Research limitations/implications

The main reasons why the differences exist among Islamic Indices are due to micro‐factor as faced by Malaysian companies such as the limited amount of capital resources. The Shari'ah supervisory board of the respective indices represents the sole body that determines the rules or criteria to be used by each index. This explains why the indices differ from one country to another and efforts should be done by regulators in the respective countries to harmonize the differing criteria used.

Originality/value

The paper represents the first study that compares the criteria used by two different indices regarding Islamic capital investment in a developing country.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 3 no. 3
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 16 September 2013

Dhiaa Shamki and Azhar Abdul Rahman

The paper aims to examine the influence of financial disclosure (FD) level and time on the value relevance of earnings, book value, and cash flows relative to three share…

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1682

Abstract

Purpose

The paper aims to examine the influence of financial disclosure (FD) level and time on the value relevance of earnings, book value, and cash flows relative to three share price proxies, namely average annual share price, annual closing share price, and share price after a three-month period following the financial year-end for Jordanian companies.

Design/methodology/approach

The paper employs price model to examine the influence of FD level and time on the value relevance of three accounting variables relative to three share price proxies for 91 Jordanian companies (consisting of 5,460 observations) within 2004-2009.

Findings

Relative to three share price proxies, the findings proved that FD level and time have a significant influence on the value relevance of book value, but not for cash flows. Also, FD level and time have a significant influence on the value relevance of earnings relative to annual closing share price, while they are not relative to share price after a three-month period following the financial year-end. FD time has a significant influence on the value relevance of earnings relative to the average annual share price. Annual closing share price is the most reliable in indicating value relevance of accounting information.

Originality/value

The paper confirms that there is a shift away from earnings towards book value as the basis for firm valuation. Market participants might be able to conclude the firm value through the value relevance of accounting information influenced by company's FD.

Details

Education, Business and Society: Contemporary Middle Eastern Issues, vol. 6 no. 3/4
Type: Research Article
ISSN: 1753-7983

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Article
Publication date: 6 January 2006

Rosiatimah Mohd Isa

This study surveyed the perceptions of users and preparers of Corporate Annual Reports (CAR) regarding graphical information (GI) disclosed in the CAR. Questionnaires were…

Abstract

This study surveyed the perceptions of users and preparers of Corporate Annual Reports (CAR) regarding graphical information (GI) disclosed in the CAR. Questionnaires were used and sent to (i) 120 selected users, and (ii) 489 CFO of non‐financial companies listed on the main board of Bursa Malaysia for the year 2002. It was found that users ranked GI as second after financial statements. The users of CAR utilized GI to evaluate company’s performance overtime, make comparison with other companies and assist in making investment decision. The KFV graphs preferred are sales, earnings, EPS, share price performance, and cash flow graphs. More than fifty percent of users believed that graphs disclosed in CAR are sufficient. The survey also revealed that 75.4 percent of Malaysian companies included graphs in their CAR. They disclosed sales, earning per share, shareholders fund, earnings, and net tangible assets. These variables were presented in bar, line, pie, and column. However, the most popular type of graph was bar. The perceived major users of GI are mainly financial analysts, potential investors and financial investors. The preparers indicated that the main reasons that hinder companies from disclosing GI in CAR are due to the sufficiency of the existing numerical and narrative disclosure, and inexistence of formal guideline regarding the construction of graphs. The findings also revealed that users were more aware of fundamental principle of graphs construction than the preparers based on the mean scores by both group on the criterion of good construction of graph. Overall, the survey evidenced that graphs are appreciated by both parties as an alternative way of communicating information in a more effective manner.

Details

Journal of Financial Reporting and Accounting, vol. 4 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 25 June 2020

Mayada Abd El-Aziz Youssef, Esam E. Moustafa and Habib Mahama

This study aims to investigate the mediating role of management control system (MCS) characteristics in the relationship between state type, reflected through societal…

Abstract

Purpose

This study aims to investigate the mediating role of management control system (MCS) characteristics in the relationship between state type, reflected through societal institutions (SIs), and two sets of management accounting techniques (MATs), namely, performance measurement techniques (PMTs) and cost measurement techniques (CMTs).

Design/methodology/approach

Structural equation modeling was used to analyze data from a cross-sectional survey of 136 firms in the United Arab Emirates (UAE).

Findings

The findings show a direct positive impact of state-type construct on MCS characteristics, and that MCS characteristics partially mediate the reported significant relationships between state type and the use of PMTs. While the findings show a similar positive relationship between state type and CMTs, MCS characteristics do not mediate this relationship.

Research limitations/implications

Although these results are affected by limitations associated with the survey method used, they are useful in explaining the necessary conditions supporting the use of MATs in general and performance measurement techniques in particular.

Practical implications

The study uses a cross-section of companies in the UAE, an attractive global investment destination, as its sample. The results can help investors better understand the choice of MATs in the UAE and its relation to MCS characteristics.

Originality/value

This study contributes to management accounting literature by determining the mediating role of MCS characteristics on the relationship between state type and the choice of two sets of MATs, whereas existing literature assumes a direct relation between the two.

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Book part
Publication date: 19 November 2018

Siti Nur Asmad Che Hassan and Asmak Ab Rahman

Purpose – This study analyses the potential of cash waqf for the socio-economic development of Kelantan state. A cash waqf scheme was established by the Kelantan Islamic…

Abstract

Purpose – This study analyses the potential of cash waqf for the socio-economic development of Kelantan state. A cash waqf scheme was established by the Kelantan Islamic Religious Council (Majlis Agama Islam Kelantan or MAIK) in an effort to contribute to the socio-economic development of the Muslim community in that state.

Methodology/approach – A qualitative method of data acquisition through interviews. Among the informants interviewed were persons well versed with waqf and Islamic affairs, and several relevant public persons in Kelantan.

Findings – The results indicate that the people of Kelantan are optimistic about the success of cash waqf, although the implementation of this instrument is still in its infancy there. The socio-economic development factors of the economy, education, well-being, agriculture, health and religious affairs can be improved with the implementation of cash waqf.

Originality/value – This chapter is the first attempt to discuss the potential of cash waqf in Kelantan.

Details

New Developments in Islamic Economics
Type: Book
ISBN: 978-1-78756-283-7

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