Books and journals Case studies Expert Briefings Open Access
Advanced search

Search results

1 – 8 of 8
To view the access options for this content please click here
Article
Publication date: 10 June 2020

Intensity of product market competition, institutional environment and accrual quality

Khairul Anuar Kamarudin, Akmalia Mohamad Ariff and Wan Adibah Wan Ismail

This paper aims to investigate the joint effect of product market competition (PMC) and institutional environment on accrual quality.

HTML
PDF (278 KB)

Abstract

Purpose

This paper aims to investigate the joint effect of product market competition (PMC) and institutional environment on accrual quality.

Design/methodology/approach

The sample covers a large data set of 52,138 firm-year observations from 35 countries over the period of 2011-2015. Using the weighted least square regression, the study estimates PMC and institutional environment on accrual quality. The study measures PMC based on Herfindahl-Hirschman index, anti-director rights index (ADRI) based on the revised and updated La Porta et al.'s (1998) and accrual quality using the modified Dechow and Dichev (2002) model proposed by McNichols (2002). The study also uses a series of specification tests using alternative measures for each variable.

Findings

The study finds that highly intensified PMC relates to a lower quality of accruals. The results also show that accrual quality is better in countries with stronger institutional environment, specifically countries with higher ADRI, investor protection, judicial independence, protection of minority shareholders’ interests, protection of property rights, strength of the auditing and reporting standards, efficacy of corporate boards and corporate ethics. The findings suggest that institutional factors weaken the negative impact of PMC intensity on accrual quality, hence suggesting that institutional environment has a significant role to enhance accrual quality among firms in highly intensified industries.

Practical implications

The findings provide additional insights to policymakers and regulators on the importance of strong institutional and industry environment that can provide incentives and extra governance mechanisms besides the conventional firm-level corporate governance.

Originality/value

This study contributes in understanding the impact of intensity of PMC on accrual quality internationally and subsequently highlights the role of institutional environment as significant country-level governance in determining financial reporting quality, particularly accrual quality.

Details

Pacific Accounting Review, vol. 32 no. 3
Type: Research Article
DOI: https://doi.org/10.1108/PAR-10-2018-0083
ISSN: 0114-0582

Keywords

  • Product market competition
  • Accrual quality
  • Institutional environment
  • Investor protection

To view the access options for this content please click here
Article
Publication date: 6 January 2005

Income Smoothing and Market Perception of Accounting Numbers: An Empirical Investigation of Extraordinary Items

Wan Adibah Wan Ismail, Khairul Anuar Kamarudin and Muhd Kamil Ibrahim

This paper examines issues related to the reporting of extraordinary items in the financial statements of Malaysian companies. The first issue concerns the change of…

HTML
PDF (5.1 MB)

Abstract

This paper examines issues related to the reporting of extraordinary items in the financial statements of Malaysian companies. The first issue concerns the change of accounting standards on extraordinary items, which has limited the scope of extraordinary items. It is found that there are significant changes on the incidence of reported extraordinary items during the period after the adoption of the new standard. The findings supported the argument that the new standards on extraordinary items had consequently reduce significantly these items from financial statements. This paper hypothesizes that extraordinary items classification choice is a means used by companies to smooth income. Two types of statistical tests performed have confirmed the proposition that the disclosure of extraordinary items is subject to this type of manipulation during the period before the adoption of the new standard. Although it is proved that the broad definition of extraordinary items allows companies to manipulate income, evidence gathered from multivariate regressions demonstrates that extraordinary items are of value‐relevance for investors in valuing a firm’s equity. Thus, investors take into account the extraordinary items even though it is disclosed “below the line”.

Details

Journal of Financial Reporting and Accounting, vol. 3 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/19852510580000337
ISSN: 1985-2517

Keywords

  • Corporate reporting
  • Malaysia
  • Accounting standards
  • Below‐the‐line reporting

To view the access options for this content please click here
Article
Publication date: 6 January 2005

Corporate Failure Prediction: An Investigation of PN4 Companies

Wan Adibah Wan Ismail, Raja Adzrin Raja Ahmad, Khairul Anuar Kamarudin and Rusliza Yahaya

This paper investigates twenty financial ratios to develop a local financial failures prediction model. The study covers the period of 1993‐2001. We used mean and…

HTML
PDF (3.4 MB)

Abstract

This paper investigates twenty financial ratios to develop a local financial failures prediction model. The study covers the period of 1993‐2001. We used mean and comparison of difference to the data set of fiveyears before the failures to identify the most superlative ratios. From these ratios, we developed two prediction models by using a logistic regression. The results indicae that these models are excellent in predicting financial failures a year before failure. Both models are able to predict financial failure two years before the failures with more than 90 per cent accuracy rate. It is hoped that this study, which is conducted using a recent data can contribute towards existing literatures on corporate failure prediction.

Details

Journal of Financial Reporting and Accounting, vol. 3 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/19852510580000334
ISSN: 1985-2517

Keywords

  • Malaysia
  • Corporate failure
  • Financial ratios

To view the access options for this content please click here
Article
Publication date: 10 May 2013

Earnings quality and the adoption of IFRS‐based accounting standards: Evidence from an emerging market

Wan Adibah Wan Ismail, Khairul Anuar Kamarudin, Tony van Zijl and Keitha Dunstan

This study aims to investigate the differences in earnings quality of Malaysian companies after the adoption of IFRS‐based accounting standards named FRS.

HTML
PDF (133 KB)

Abstract

Purpose

This study aims to investigate the differences in earnings quality of Malaysian companies after the adoption of IFRS‐based accounting standards named FRS.

Design/methodology/approach

It is hypothesize that under the new set of accounting standards, the quality of earnings reported by these companies is relatively higher. Specifically, the study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period. This study uses a large sample of 4,010 observations over a three‐year period before and a three‐year period after the adoption of the new set of accounting standards.

Findings

The results show that IFRS adoption is associated with higher quality of reported earnings. It is found that earnings reported during the period after the adoption of IFRS is associated with lower earnings management and higher value relevant.

Originality/value

The results of this study contribute additional evidence to the literature on earnings quality and the impact of IFRS adoption. As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market.

Details

Asian Review of Accounting, vol. 21 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/13217341311316940
ISSN: 1321-7348

Keywords

  • Earnings quality
  • Accounting standards
  • IFRS
  • Financial reporting
  • Malaysia

To view the access options for this content please click here
Article
Publication date: 13 April 2015

The quality of earnings in Shariah-compliant companies: evidence from Malaysia

Wan Adibah Wan Ismail, Khairul Anuar Kamarudin and Siti Rahayu Sarman

– The purpose of this study is to examine the quality of reported earnings in the corporate reports of Shariah-compliant companies listed on Bursa Malaysia.

HTML
PDF (171 KB)

Abstract

Purpose

The purpose of this study is to examine the quality of reported earnings in the corporate reports of Shariah-compliant companies listed on Bursa Malaysia.

Design/methodology/approach

This study hypothesises that companies with Shariah compliance status have higher quality of earnings because of greater demand for and supply of high-quality financial reports. The quality of reported earnings is measured using the cross-sectional Dechow and Dichev (2002) accrual quality model. The study uses a balanced panel data of 3,048 observations from 508 companies during a six-year period of 2003-2008.

Findings

This paper finds robust evidence that Shariah-compliant companies have significantly higher earnings quality compared to other firms. The results provide support for the arguments that Shariah-compliant companies supply a higher quality of reported earnings to attract foreign investment, have greater demand for high-quality financial reporting because of their Shariah status and are subject to greater scrutiny by regulators and institutional investors.

Research limitations/implications

This study contributes to the existing literature on Islamic capital market, business ethics, firms’ governance and financial reporting quality. The study would give a better understanding on issues relating to earnings quality of Shariah-compliant companies and would be especially useful for financial statement users, including investment analysts.

Originality/value

This paper provides evidence on the quality of earnings in Shariah-compliant companies and offers new arguments that explain why such companies possess higher quality of earnings compared to their counterparts.

Details

Journal of Islamic Accounting and Business Research, vol. 6 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/JIABR-03-2013-0005
ISSN: 1759-0817

Keywords

  • Financial reporting
  • Accrual quality
  • Earnings quality
  • Shariah-compliant

To view the access options for this content please click here
Article
Publication date: 3 December 2020

Does Sharia compliance affect financial reporting quality? An evidence from Muslim majority countries

Gökberk Can

Sharia compliance states that the compliant company operates not only under regulations but also to the restrictions and permission of Islam. This study aims to reveal…

HTML
PDF (185 KB)

Abstract

Purpose

Sharia compliance states that the compliant company operates not only under regulations but also to the restrictions and permission of Islam. This study aims to reveal whether Sharia compliance enhances the financial reporting quality.

Design/methodology/approach

The sample is constructed from 15 Muslim majority countries, 2,300 companies for the periods between 2005 and 2017 with 23,810 firm*year observations. Financial reporting quality is measured with discretionary accruals and audit aggressiveness. Discretionary accruals is the absolute of Kothari, Leone and Wasley’s (2005) “performance matched discretionary accruals model.” Audit aggressiveness is calculated with Gul, Wu and Yang’s (2013) model.

Findings

This study reveals the behavioral differences in financial reporting quality between Sharia-compliant and non-compliant companies. According to the analyzes, Sharia compliance increases the financial reporting quality by decreasing the discretionary accruals and audit aggressiveness. This result is supported by the robustness tests.

Practical implications

Sharia compliance is not limited to business activity, financial restrictions and supervisory board for Sharia-compliant companies. It also enhances the companies’ financial reporting quality. Robustness analysis also showed that the International Financial Reporting Standards (IFRS) increases the financial reporting quality by reducing discretionary accruals and audit aggressiveness.

Originality/value

This study contributes to the accounting literature by providing an insight on the use of Islamic financial instruments. The empirical results also show that the use of IFRS and Islamic financial instruments decreases the discretionary accruals and audit aggressiveness.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 1
Type: Research Article
DOI: https://doi.org/10.1108/IMEFM-04-2019-0149
ISSN: 1753-8394

Keywords

  • Discretionary accruals
  • Shari’ah compliance
  • Financial reporting quality
  • Audit aggressiveness

To view the access options for this content please click here
Article
Publication date: 29 May 2020

Financial reporting quality and share price movement-evidence from listed companies in Bangladesh

Md. Mamunur Rashid

The purpose of this study is to examine the effect of financial reporting quality (FRQ) on share price movement (SPM) of listed companies in an emerging and developing…

HTML
PDF (709 KB)

Abstract

Purpose

The purpose of this study is to examine the effect of financial reporting quality (FRQ) on share price movement (SPM) of listed companies in an emerging and developing economy – Bangladesh.

Design/methodology/approach

The study analyzed 296 annual reports for the year 2015 and 2016 in examining the effect of FRQ on SPM. Ordinary least squares (OLS) regression model is used to examine the hypothesized relationship among the variables. A modified version of Lang et al. (2003) has been adopted in measuring the SPM. FRQ is measured using the qualitative characteristics approach as defined by the International Financial Reporting Standard Framework and used by Beest et al. (2009) and Braam and Beest (2013).

Findings

The study finds a positive association (though not significant statistically) between the FRQ and SPM in the country’s leading stock exchange (Dhaka stock exchange). Furthermore, the effect of enhancing quality on SPM is found to be stronger as compared to fundamental quality. Majority of the FRQ constructs demonstrate an improvement in the quality score in the year 2016 as compared to 2015 except for relevance.

Research limitations/implications

The key limitation of the study is that it focuses only on two years (2015 and 2016) annual reports data in measuring FRQ and its effect on SPM.

Originality/value

The study uses qualitative characteristics approach in measuring the FRQ and to examine its effect on SPM using the context of an emerging and developing economy – the case of Bangladesh.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 3
Type: Research Article
DOI: https://doi.org/10.1108/JFRA-01-2019-0019
ISSN: 1985-2517

Keywords

  • Bangladesh
  • Emerging economy
  • Financial reporting quality
  • Stock price
  • Qualitative characteristics
  • Share price movement

To view the access options for this content please click here
Article
Publication date: 4 April 2016

Earnings quality and audit attributes in high concentrated ownership market

Ahmed Hussein Al-Rassas and Hasnah Kamardin

The purpose of this study is to examine the effect of the audit committee (AC) independence, financial expertise, internal audit function, audit quality and ownership…

HTML
PDF (209 KB)

Abstract

Purpose

The purpose of this study is to examine the effect of the audit committee (AC) independence, financial expertise, internal audit function, audit quality and ownership concentration on earnings quality (EQ) and, consequently, ascertain whether the AC’s independence and financial expertise has a moderating effect on the relationship between internal audit function and EQ.

Design/methodology/approach

The study sample is 508 firms listed on the Main Market of Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange) for the years 2009 to 2012. EQ was measured using two modified Jones models of discretionary accruals.

Findings

The findings reveal that the independence of AC and investment in internal audit function, as well as the Big4 audit firm, are related to greater EQ. Ownership concentration is found to be associated with lower EQ. The study provides evidence that AC’s independence moderates the relationship between internal audit function (investment in and sourcing arrangements of internal audit function) and EQ. It also shows that AC’s financial expertise moderates the relationship between sourcing arrangements of internal audit function and EQ.

Practical implications

This study extends the prior related literature by examining the AC’s independence and financial expertise as moderating variables on the relationship between internal audit function and EQ.

Social implications

Policymakers might use the findings regarding EQ in relation to governance practices, to recognize the important roles played by the AC’s independence and financial expertise on the effectiveness of internal audit function with EQ.

Originality/value

This study uses the agency theory and resource dependence theory to provide empirical evidence on the impact of internal audit function and AC on EQ in the ownership concentration environment.

Details

Corporate Governance, vol. 16 no. 2
Type: Research Article
DOI: https://doi.org/10.1108/CG-08-2015-0110
ISSN: 1472-0701

Keywords

  • Malaysia
  • Ownership concentration
  • Earnings quality
  • Audit committees
  • Discretionary accruals
  • Internal audit function
  • M41
  • M48
  • G34
  • G38

Access
Only content I have access to
Only Open Access
Year
  • Last 3 months (1)
  • Last 6 months (1)
  • Last 12 months (3)
  • All dates (8)
Content type
  • Article (8)
1 – 8 of 8
Emerald Publishing
  • Opens in new window
  • Opens in new window
  • Opens in new window
  • Opens in new window
© 2021 Emerald Publishing Limited

Services

  • Authors Opens in new window
  • Editors Opens in new window
  • Librarians Opens in new window
  • Researchers Opens in new window
  • Reviewers Opens in new window

About

  • About Emerald Opens in new window
  • Working for Emerald Opens in new window
  • Contact us Opens in new window
  • Publication sitemap

Policies and information

  • Privacy notice
  • Site policies
  • Modern Slavery Act Opens in new window
  • Chair of Trustees governance statement Opens in new window
  • COVID-19 policy Opens in new window
Manage cookies

We’re listening — tell us what you think

  • Something didn’t work…

    Report bugs here

  • All feedback is valuable

    Please share your general feedback

  • Member of Emerald Engage?

    You can join in the discussion by joining the community or logging in here.
    You can also find out more about Emerald Engage.

Join us on our journey

  • Platform update page

    Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

  • Questions & More Information

    Answers to the most commonly asked questions here