Search results

This study aims to investigate whether higher earnings quality is related to the existence of multiple directorships among corporate boards and whether this relationship varies with the quality of investor protection.

This paper used a dynamic panel data modelling on the sample of 2,090 firm-year observations over the period from 2007 to 2016 in Malaysia. The generalized method of moments estimators were used to deal with endogeneity and other econometric problems.

This study finds that the accumulation of several outside directorships is negatively associated with the firm's earnings quality, as measured by the magnitude of discretionary accruals. More importantly, the findings provide evidence that multiple directors are more efficient in improving earnings quality in healthy investor protection environment.

The appointment of directors should be based on market-based and not on a relationship (i.e. financial and industry professionals).

The results highlight the importance of interaction between internal and external governance mechanisms to improve the firm's financial performance, investment and market efficiency. High-quality investor protection and law enforcement are significant for enhancing the monitoring role of multiple directorships in improving earnings quality.

The present study aims to examine the effect of environmental information on fund managers’ investment and bank officers’ lending decisions. Specifically, it looks at the effect of qualitative and quantitative forms of environmental information to their decisions.

Drawing from the normative pressure of institutional theory, the study seeks to identify the extent to which education and professional networks influence investment and lending decisions of fund managers and bank officers. A laboratory experiment was used to collect the data. Twenty-three subjects volunteered in each experimental group, totalling 69 responses from fund managers and bank officers. The subjects were Master of Administration (MBA) students in universities located in Selangor and Kuala Lumpur, Malaysia, to proxy for real practitioners.

The results reveal that fund managers and bank officers do not incorporate environmental information in their investment and lending decisions. Thus, the normative pressure of institutional theory is supported.

Acknowledging the limitations of data generalisability using student surrogates, future research utilising real practitioners is proposed.

Recognising the importance of environmental information to be incorporated in investment and lending decisions of these major stakeholders, the results suggest universities, professional bodies and companies need to raise awareness concerning the importance and relevance of environmental information in various decisions.

The study offers some preliminary insights into the use of environmental information by fund managers and bank officers in Malaysia.