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Article
Publication date: 31 January 2020

Shaista Wasiuzzaman

This paper aims to examine the effect of geographical diversification on corporate liquidity in Malaysian firms. Liquidity is represented by both cash and working capital.

Abstract

Purpose

This paper aims to examine the effect of geographical diversification on corporate liquidity in Malaysian firms. Liquidity is represented by both cash and working capital.

Design/methodology/approach

Data for this study is collected from a total of 735 firms over a period of five years, from 2010 to 2014, resulting in a total of 2,904 firm-year observations. The effect of geographical diversification on the cash and working capital of the firms is analyzed by using the ordinary least squares (OLS) with standard errors adjusted for firm level clustering and the quantile regression (QR) analyses. Control variables which represent the characteristics of the firms are also considered.

Findings

Analysis using the OLS regression technique indicates that geographical diversification has a highly significant positive influence on corporate cash holdings, while the influence of working capital is negative and its significance is only at the 10 per cent level. However, when QR is used to analyze the relationships, it is found that geographical diversification is only significant in positively influencing cash holdings for firms with low cash holdings, but the relationship is insignificant at high levels of cash holdings. Additionally, working capital is significantly influenced by geographical diversification at high levels of working capital but not at low levels.

Originality/value

To the author’s knowledge, this is the first study to analyze the influence of geographical diversification on liquidity by considering both cash and working capital. The effect of diversification on liquidity is mostly studied in developed countries, whereas this study is focused on a developing country. Additionally, this study uses QR to analyze relationships at different levels rather than at aggregate level as done in OLS regression analysis.

Details

Pacific Accounting Review, vol. 32 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 19 November 2018

Shaista Wasiuzzaman

The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies…

Abstract

Purpose

The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly focus on developed countries and on large firms. Liquidity is critical for the small firm but studies on liquidity management in small and medium enterprises (SMEs) are lacking. The purpose of this paper is to examine the firm-level determinants of liquidity of SMEs in Malaysia.

Design/methodology/approach

Data are collected for a total of 986 small firms in Malaysia from 2011 to 2014, resulting in a total of 2,683 observations. Firm-specific variables and the effect of the economy are considered as the possible determinants of liquidity. Ordinary least squares (OLS) regression analysis with standard errors adjusted for firm-level clustering and quantile regression analysis are used for this purpose.

Findings

Analysis using OLS regression technique indicates that a firm’s profitability, its growth, asset tangibility, size, age and firm status are significant factors in influencing its liquidity decision. Leverage and economic condition are not found to have any significant influence on liquidity. However, quantile regression analysis provides a different picture especially for SMEs with liquidity at the quantile levels of θ=0.10 and 0.90. At θ=0.10, only profitability, tangibility and firm status are significant, while at θ=0.90, tangibility, size, firm status and, to some extent, age are significant in influencing liquidity levels.

Originality/value

To the author’s knowledge, this is the first study analyzing the liquidity decision of SMEs in an emerging market such as Malaysia. Most studies on liquidity management of SMEs are focused on developed countries due to data availability but these studies are also only a handful. Additionally, this study uses quantile regression analysis which highlights the need to analyze financial decisions at different levels rather than at the aggregate level as done in OLS regression analysis.

Details

International Journal of Productivity and Performance Management, vol. 67 no. 9
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 8 May 2018

Shaista Wasiuzzaman, Fook Lye Kevin Yong, Sheela Devi D. Sundarasen and Noor Shahaliza Othman

When a firm goes public for the first time, its prospectus serves as an important reference for investors. It is required by regulation that the risk factors which have…

Abstract

Purpose

When a firm goes public for the first time, its prospectus serves as an important reference for investors. It is required by regulation that the risk factors which have significant influence on the business be disclosed in the prospectus. The purpose of this study is to analyze how disclosure of these risk factors influences the initial returns of initial public offerings (IPOs).

Design/methodology/approach

To do this, a sample of 96 Malaysian new equity offerings (IPOs) from year 2009 to year 2013 is used. Ordinary least squares regression technique is used to regress initial returns against risk disclosures. Aside from overall risk disclosure, individual dimensions of risk (internal risk, external risk and investment risk) are also considered.

Findings

Results of the regression analyses reveal a direct relationship between the IPO initial returns and the disclosure of risk. Overall risk disclosure is found to be highly significant in influencing initial returns. However, further investigation into the individual group of risks shows that only investment risk is highly significant in influencing IPO initial returns.

Originality/value

The results found in this study are interesting as, unlike prior studies, it is shown that disclosures of internal and external risks are not significant in influencing investors’ actions possibly because of their generalizability, whereas disclosures related to investment risks are significant. Equity of firms which disclose more of its risk factors can be expected to generate higher initial returns.

Details

Accounting Research Journal, vol. 31 no. 1
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 29 November 2018

Shaista Wasiuzzaman

The purpose of this paper is to detect variations in earnings management activity across industries and the possible influence of various industry variables on these variations.

Abstract

Purpose

The purpose of this paper is to detect variations in earnings management activity across industries and the possible influence of various industry variables on these variations.

Design/methodology/approach

A total sample of 4,249 firm-year observations from 13 different industries spanning a total of eight years (from 2005 to 2012) is used for this purpose. The ordinary least squares regression technique is used to test the influence of various industry variables on earnings management activity.

Findings

The findings indicate the presence of earnings management practices in Malaysian industries. Among industry-level variables, capital intensity, volatility and profitability are found to influence aggregate earnings management. Further analysis shows that volatility only influences the smoothing measure while profitability influences the discretionary measure. Interestingly, industry competitiveness and leverage are not able to explain the variations in earnings management across industries.

Originality/value

To the authors’ knowledge, this is the first study which documents the role of various industry characteristics in influencing earnings management activity. It highlights the importance of considering industry-level variables in a study on earnings management and, hence, adds to the growing literature on earnings management.

Details

International Journal of Emerging Markets, vol. 13 no. 5
Type: Research Article
ISSN: 1746-8809

Keywords

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Article
Publication date: 30 August 2018

Shaista Wasiuzzaman and Nabila Nurdin

The purpose of this paper is to examine the various factors that influence a small and medium enterprise’s (SME) decision to apply for bank loans.

Abstract

Purpose

The purpose of this paper is to examine the various factors that influence a small and medium enterprise’s (SME) decision to apply for bank loans.

Design/methodology/approach

Data from survey responses of 145 SMEs from Selangor and the Federal Territory of Kuala Lumpur are used for this purpose. Exploratory factor analysis, logistic regression and SEM-PLS are used to analyze the data.

Findings

The findings from the survey show that an SME’s financial performance, its access to finance and its legal form play a significant positive role in its decision to apply for debt financing. Private limited SMEs that perform well and are able to access to various financing options are more likely to apply for financing. However, there is also evidence of a significant negative influence of credit history on the decision to apply for financing, as SMEs with a poor credit history are more likely to apply for financing. The age of an SME has weak influence while its size is found to be insignificant in influencing its decision to apply for financing.

Originality/value

The results imply the role of financial market imperfections such as adverse selection and information asymmetry in defining the SME’s demand for debt financing. The study contributes to a deeper understanding of the debt financing decisions of SMEs.

Details

International Journal of Bank Marketing, vol. 37 no. 1
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 15 January 2018

Shaista Wasiuzzaman and Noura Abdullah Al-Musehel

The purpose of this paper is to focus on the influence of mood/emotions and religious experience on Islamic stock markets during the Ramadan month.

Abstract

Purpose

The purpose of this paper is to focus on the influence of mood/emotions and religious experience on Islamic stock markets during the Ramadan month.

Design/methodology/approach

This study uses stock returns data of two countries – Saudi Arabia and Iran – from January 2008 to September 2014 and the ARMA-GARCH models to study impact of the Ramadan month on the return and volatility of the stock market in these two countries.

Findings

The results of this study show some differences in the impact of the Ramadan month on the return and volatility of the stock market in these two countries. While the Ramadan month has a significant positive influence on the mean returns and the volatility of the Saudi market, its influence on the Iranian market is found to be insignificant. Further analysis on the last ten days of the Ramadan month provides a similar result for the Saudi market. However, for the Iranian market, volatility is significantly negatively affected during these last ten days.

Originality/value

Most prior studies have found significant changes in returns during the Ramadan month but a deeper understanding of this stock market anomaly is needed. The results point toward the influence of mood/emotions and religious experience in explaining the existence of the Ramadan anomaly.

Details

International Journal of Emerging Markets, vol. 13 no. 1
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 28 November 2019

Shaista Wasiuzzaman, Nabila Nurdin, Aznur Hajar Abdullah and Gowrie Vinayan

The purpose of this study is to empirically assess the relationship between the dimensions of creditworthiness and access to finance of small and medium-sized enterprises…

Abstract

Purpose

The purpose of this study is to empirically assess the relationship between the dimensions of creditworthiness and access to finance of small and medium-sized enterprises (SMEs) in Malaysia, with creditworthiness as the mediating variable. The lack of empirical research on the relationship between creditworthiness and access to finance forms the motivation of this study.

Design/methodology/approach

Questionnaires covering various characteristics of the firms, their access to finance and creditworthiness were distributed to a total of 456 SMEs in the Kuala Lumpur and Selangor region for this purpose. A total of 158 responses were returned, of which 145 were usable responses and the relationships are tested using SEM-PLS.

Findings

This study finds that an SME and its owner’s character have significant influences on access to finance. An SME’s condition and its ability to provide high quality collateral are found to be highly significant in influencing its access to finance. Capacity is significant but its significance is low, while capital is insignificant. Creditworthiness has a significant positive influence on access to finance.

Originality/value

This study contributes to the important yet under-researched issue of access to finance for SMEs. It highlights the issue of character of applicant as an important dimension of creditworthiness that can significantly influence access to finance for SMEs.

Details

Management Research Review, vol. 43 no. 3
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 13 January 2020

Wan Masliza Wan Mohammad and Shaista Wasiuzzaman

The purpose of this paper is to investigate the effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia.

Abstract

Purpose

The purpose of this paper is to investigate the effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia.

Design/methodology/approach

The effect of audit committee independence, board ethnicity and family ownership on corporate governance is investigated via 1,206 firm-year observations between the fiscal years of 2004 and 2009 of Bursa Malaysia listed firms. Panel data regression analysis is used to analyze the relationship.

Findings

The findings of this study fail to associate the role of audit committee independence as proposed under RMCCG (2007) in curtailing earnings management activities, thus supporting the findings on power distance scores that power granted to the top management may result in less effective independent directors. Nonetheless, in support of the alignment effect theory, family ownership is found to reduce earnings management activities. The findings show that corporate governance is more effective in developing country family firms due to their long history of family reputation and the importance of institutional culture factors.

Research limitations/implications

This study focuses on board ethnicity, family ownership and its influence on earnings management.

Originality/value

This study offers insights into the importance of family institutional structures on corporate governance reforms in Malaysia as Malaysian family firms are mostly traditional firms that have built their reputation and strength in the industry for many generations.

Details

Journal of Accounting in Emerging Economies, vol. 10 no. 1
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 1 August 2016

Wan Masliza Wan Mohammad, Shaista Wasiuzzaman and Nik Mohamad Zaki Nik Salleh

This purpose of this paper is to examine the implications of the Revised Malaysian Code on Corporate Governance (2007) toward the effectiveness of the board and audit…

Abstract

Purpose

This purpose of this paper is to examine the implications of the Revised Malaysian Code on Corporate Governance (2007) toward the effectiveness of the board and audit committees in Malaysian manufacturing companies. Since the manufacturing firms are dominantly held by Chinese firms, this paper is extended to incorporate the implication of ethnicity on board and audit committees’ effectiveness.

Design/methodology/approach

Using a sample of 201 firms from fiscal year 2004-2009, the data set consists of a total of 1,206 firm-year observations. Analysis is carried out using correlation analysis, multiple and logistic regression analyses.

Findings

The findings reveal that board and audit committees’ effectiveness is positively associated with earnings management pre- and post-Revised Malaysian Code on Corporate Governance (2007). A higher number of ethnic members in the board are also positively associated with earnings management.

Research limitations/implications

This study is limited to some industries in the manufacturing sector due to the special characteristics of this sector and covers mostly large firms. The results may not therefore be applicable to small firms. Finally, the study does not consider possible interaction between the board and audit characteristics which may be significant in influencing earnings management.

Practical implications

The findings show that the corporate governance mechanism in Malaysian firms is currently inadequate in preventing earnings management and extra effort is needed to improve board governance.

Originality/value

This paper contributes to the current literature on the issues of corporate governance effectiveness and board ethnicity in the current economic and political structure in Malaysia.

Details

Corporate Governance, vol. 16 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 17 July 2019

Shaista Wasiuzzaman

This study aims to investigate the role of interfirm alliances in the form of resource sharing in influencing the access to finance of small- and medium-sized enterprises…

Abstract

Purpose

This study aims to investigate the role of interfirm alliances in the form of resource sharing in influencing the access to finance of small- and medium-sized enterprises (SMEs) in Malaysia. Further, the effect of different forms of resource sharing – tangible and intangible – is also studied.

Design/methodology/approach

Survey questionnaire was distributed to 456 SMEs in the manufacturing sector and a total of 146 responses were gathered. However, out of these, only 88 responses could be used as only these SMEs had alliances with large firms. Investigation into the relationship between interfirm alliances and SME access to finance was carried out using structural equation modeling – partial least squares.

Findings

It is found that interfirm alliances play a significant positive role in influencing SME access to finance. As interfirm alliances are measured as the extent of resource sharing, further analysis is carried out on the different forms of resource sharing, i.e. tangible and intangible. Tangible resource (asset and cost) sharing significantly influences SME access to finance but intangible resource (knowledge and information) sharing does not.

Originality/value

This study contributes to the understanding of the effects of interfirm alliances on the financing of SMEs. So far, most studies have only focused on the management and technological gains of interfirm alliances. Therefore, this study contributes significantly to literature on resource sharing among firms.

Details

Management Research Review, vol. 42 no. 12
Type: Research Article
ISSN: 2040-8269

Keywords

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