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This study aims to examine the relation between long-term debt and internationalization in the presence of the agency costs of debt and business risk.

Sample firms consist of 517 non-financial listed firms in Malaysia, with 4,197 firm-year observations from the year 2000 to 2014. This study uses panel data regressions and a series of robustness tests to examine the hypotheses.

The results show that multinational corporations (MNCs) are more likely to sustain less long-term debt than domestic corporations (DCs) to mitigate the costs related to agency problem and firm risk. Meanwhile, foreign-based MNCs maintain less long-term debt than local-based firms, and the finding is more significant at a higher degree of internationalization. Robustness tests confirm the negative relations.

The findings indicate that the ongoing debate on the debt financing puzzle can be explained by internationalization. Moreover, the findings suggest that in addition to the systematic differences between MNCs and DCs, studies on the debt financing and internationalization should also account for the systematic differences among MNCs such as the local-based MNCs, foreign-based MNCs and DCs that later expand their business operations abroad.

MNCs have to be responsive to the diverse institutional environments as they diversify their business operations geographically. When the adverse effects of internationalization outweigh the benefits, MNCs could use the long-term debt financing decision to mitigate the costs of doing business abroad. This is because debt financing is also a primary concern in the corporate financial decisions for the maximization of shareholders’ wealth.

This study contributes to the debt financing literature from the international perspective by providing evidence from an emerging market. In addition, this study highlights the importance of recognizing firms by their firm-specific characteristics, such as internationalization, given the systematic differences among firms.

This study aims to revisit the relationship between Shariah-compliant firms and earnings management. Specifically, the authors examine whether Shariah-certified firms have lower earnings management than non-Shariah-certified firms and how often a firm must hold its certification to observe considerably reduced earnings management. This study also explores how senior management ethnic dualism affects the association of Shariah certification and earnings management.

The authors analyze the hypothesized association between Shariah certification and earnings management using a panel regression model and several robustness tests, including the Heckman selection model. The sample consists of 547 nonfinancial firms listed on the Bursa Malaysia stock exchange, with 5,478 firm-year observations over the 2001–2016 sample period.

Shariah certification is found to mitigate earnings management, particularly for firms that consistently retain their Shariah status. The longer firms retain their Shariah certification continually, the lower the earnings management. Additionally, the results indicate that the negative impact of Shariah certification on earnings management is driven by ethnic duality when a specific ethnic group dominates the top management.

Firms’ commitment to religious-based screening and continuation of certification plays a significant role in improving earnings quality. Firms are committed to abiding by the Shariah code of conduct instead of using the Shariah status for reputation purposes to attract investors.

For investors, the continuous compliance status is a crucial indicator of a firm’s commitment to comply with Shariah principles and to mitigate earnings management. Regarding policy implications, Shariah-compliance guidelines can constrain earnings manipulation, especially among firms lacking ethnic diversity.

The study shows that Shariah certification must be maintained consecutively to reduce earnings management. Shariah certification’s governance function is crucial in ethnically homogeneous firms, primarily when one ethnic group dominates the senior management.

The purpose of this paper is to investigate the effects of Shariah-compliant status and the presence of information asymmetry on investors’ demand for initial public offerings (IPOs) in Malaysia.

The data regarding 260 IPOs dated for a duration of 11 years were acquired from the websites of Bursa Malaysia and Malaysian Issuing House. In evaluating the association between IPO oversubscription and the independent variables in this study, multivariate and quantile regression analyses were implemented.

It was found that Shariah-compliant status (DSHARIAH) had a significant positive relationship with IPO oversubscription. With this, it was indicated that Shariah-compliant status gains investors’ interests in subscribing to IPOs as these shares could be distributed to a wider group of investors. In the case of the proxies of information asymmetry, although firm size posed significant effects on IPO oversubscription, the effects were negative. Meanwhile, institutional investors posed significant positive effects on IPO oversubscription. Furthermore, it was indicated from the negative effects of firm size that less subscription is received by large firms which are perceived to possess lower information asymmetry from the investors. This is owing to the less underpricing provided by the issuers for their IPOs. However, it was indicated from the significant positive association between institutional investors and IPO oversubscription that the participation in the IPO among institutional investors would enhance the enthusiasm of investors for a specific stock and increase the probability of IPO oversubscription. With this, the winner’s curse hypothesis was supported.

It is recommended that future studies investigate the compliance aspect, specifically the financial and nonfinancial aspects which may affect investors’ decision-making process for their investment.

With the availability of this study’s indicators in the prospectus, the findings of this study have provided useful insights for an issuer and underwriter to ensure a good subscription of its issuance.

The findings of this study have provided further comprehension to investors regarding the essential information found in the prospectus during the decision-making process done for IPO subscription.

To the best of the authors’ knowledge, this is one of the first articles which have proven the effects of Shariah-compliant status and the presence of information asymmetry on IPO investors’ demand.

This study aims to examine the changes in equity guidelines and initial returns in the Malaysian initial public offering (IPO) market.

The study uses cross-sectional data over 16 years from 2000 to 2016. It uses ordinary least squares for the baseline model and incorporates an interaction term, quantile regression, quadratic term, break test and logit regression model for further analysis.

The results support the propositions that lockup provisions signal commitment and demand increase initial returns. The revision in the Bumiputera equity requirement means that issuers no longer need to discount offer prices to entice investors. Finally, the revised Sharīʿah-compliance screening requirement ensures that stocks are better in quality and more transparent, leading to a higher demand that drives prices upwards.

This study’s findings provide insights into how issuers can secure good subscriptions. Besides, policymakers should ensure that firms disclose the required information in their prospectuses.

This study adds to the body of knowledge on whether and how the regulatory requirements affect IPO initial returns.