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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…

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1132

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: 1 February 2016

Sheela Devi D. Sundarasen, Tan Je-Yen and Nakiran Rajangam

The purpose of this paper is to examine the effect of board composition on corporate social responsibility (CSR) for selected Malaysian companies in Bursa Malaysia.

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2553

Abstract

Purpose

The purpose of this paper is to examine the effect of board composition on corporate social responsibility (CSR) for selected Malaysian companies in Bursa Malaysia.

Design/methodology/approach

The paper analyses board composition and CSR of Malaysian (family and non-family) firms using linear regression analysis.

Findings

The empirical findings indicate that non-executive directors (NEDs) and independent non-executive directors (INEDs) designate a negative relationship, while women on board indicate a positive relationship. The only variable that positively affects the level of CSR initiatives is the presence of women directors. As for family and non-family business, the main findings are: a positive relationship between NEDs and CSR initiatives in non-family business and a negative relationship between INEDs and CSR for family-controlled business.

Research limitations/implications

This paper is limited only to selected companies on Bursa Malaysia over a period of two years. The paper suggests that board composition in an emerging market is relatively ineffective in improving CSR initiatives, with the exception of women on board. This is more prevalent in family business, as they do not seem to contribute toward humanizing or cultivating CSR in their companies.

Practical implications

This paper can be used as a reference by regulatory bodies to further investigate on the means as to how board composition can further contribute toward CSR initiatives, as these board members have inherent authorities and decision-making power. Composition and role of women directors in board needs to be further deliberated.

Originality/value

This paper contributes to the existing literature in terms of the roles of board composition on CSR initiatives. It further highlights the difference in the aforementioned relationship between family and non-family business.

Details

Corporate Governance: The International Journal of Business in Society, vol. 16 no. 1
Type: Research Article
ISSN: 1472-0701

Keywords

Content available
Article
Publication date: 18 March 2019

Sheela Devi D. Sundarasen

This paper aims to provide empirical evidence on the extent of alteration institutional characteristics, i.e. legal origin and corruption levels, may have on the signaling…

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1427

Abstract

Purpose

This paper aims to provide empirical evidence on the extent of alteration institutional characteristics, i.e. legal origin and corruption levels, may have on the signaling effects of auditors’ reputation, underwriters’ reputation and ownership retention on initial public offering (IPO) initial returns in OECD countries.

Design/methodology/approach

Cross-sectional data composed of 6,182 IPOs from 30 OECD countries are used for 2003-2012. Ordinary least square with multiple linear regressions is used to test the hypotheses.

Findings

The findings indicate that the legal framework and corruption level of a country alters the signaling effects of underwriters’ reputation, auditors’ reputation and ownership retention in an IPO environment. These three variables mitigate information asymmetry, signal firm value to potential investors and ultimately decrease IPO initial returns. This relationship is more significant in the civil law countries. Corruption levels negatively moderate the relationship in the common law and Scandinavian civil law countries but have no significance in the German and French civil law countries, indicating the importance of the signaling variables in these two civil law countries.

Originality/value

This study examines the extent of the alterations that the legal framework and the corruption levels cause to the signaling relationship between auditors’ reputation, underwriters’ reputation and ownership retention on IPO initial returns in selected OECD countries.

Details

PSU Research Review, vol. 3 no. 1
Type: Research Article
ISSN: 2399-1747

Keywords

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