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Financial reporting behaviour and firm’s economic success: Malaysian evidence

The emergence of modern corporate landscape, with regard to the way firms are managed and controlled, creates a variety of financial reporting issues. Empirical results in prior studies have been inconclusive, as to whether financial reporting behaviours i.e. earnings management activities are d...

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Main Authors: Nor Irdawati Mahyuddin,, Hairul Suhaimi Nahar,, Yusniyati Yusri,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2020
Online Access:http://journalarticle.ukm.my/16734/1/39311-141071-1-PB.pdf
http://journalarticle.ukm.my/16734/
https://ejournal.ukm.my/ajac/issue/view/1350
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spelling my-ukm.journal.167342021-06-08T02:27:07Z http://journalarticle.ukm.my/16734/ Financial reporting behaviour and firm’s economic success: Malaysian evidence Nor Irdawati Mahyuddin, Hairul Suhaimi Nahar, Yusniyati Yusri, The emergence of modern corporate landscape, with regard to the way firms are managed and controlled, creates a variety of financial reporting issues. Empirical results in prior studies have been inconclusive, as to whether financial reporting behaviours i.e. earnings management activities are detrimental to firms’ economic success (proxied by its future performance). Some have argued that managing earnings are intended to achieve better future performance rather than being opportunistic in nature. This study aims to empirically investigate whether managing earnings to meet earnings target has any affect on firms’ future performance in Malaysia. In extending prior work in the earnings management area, by incorporating discretionary reporting behaviour element to provide better view of Malaysian firms’ financial reporting behaviours across 2001–2015 reporting horizon, we find that real-based earnings management led to lower firm’s future performance. This supports the agency theory prediction that firms which engage in real reporting opportunistically would negatively affect their future economic performance. This, however, does not hold true for accruals earnings management. The empirical results suggest that different mechanisms of financial reporting behaviour, of either discretionary or real in nature, provide different implications on the firms’ future performance. The paper adds to the growing body of empirical knowledge in financial reporting behaviours and firms’ economic success in an emerging economy like Malaysia. Penerbit Universiti Kebangsaan Malaysia 2020 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/16734/1/39311-141071-1-PB.pdf Nor Irdawati Mahyuddin, and Hairul Suhaimi Nahar, and Yusniyati Yusri, (2020) Financial reporting behaviour and firm’s economic success: Malaysian evidence. Asian Journal of Accounting and Governance, 14 . pp. 1-9. ISSN 2180-3838 https://ejournal.ukm.my/ajac/issue/view/1350
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description The emergence of modern corporate landscape, with regard to the way firms are managed and controlled, creates a variety of financial reporting issues. Empirical results in prior studies have been inconclusive, as to whether financial reporting behaviours i.e. earnings management activities are detrimental to firms’ economic success (proxied by its future performance). Some have argued that managing earnings are intended to achieve better future performance rather than being opportunistic in nature. This study aims to empirically investigate whether managing earnings to meet earnings target has any affect on firms’ future performance in Malaysia. In extending prior work in the earnings management area, by incorporating discretionary reporting behaviour element to provide better view of Malaysian firms’ financial reporting behaviours across 2001–2015 reporting horizon, we find that real-based earnings management led to lower firm’s future performance. This supports the agency theory prediction that firms which engage in real reporting opportunistically would negatively affect their future economic performance. This, however, does not hold true for accruals earnings management. The empirical results suggest that different mechanisms of financial reporting behaviour, of either discretionary or real in nature, provide different implications on the firms’ future performance. The paper adds to the growing body of empirical knowledge in financial reporting behaviours and firms’ economic success in an emerging economy like Malaysia.
format Article
author Nor Irdawati Mahyuddin,
Hairul Suhaimi Nahar,
Yusniyati Yusri,
spellingShingle Nor Irdawati Mahyuddin,
Hairul Suhaimi Nahar,
Yusniyati Yusri,
Financial reporting behaviour and firm’s economic success: Malaysian evidence
author_facet Nor Irdawati Mahyuddin,
Hairul Suhaimi Nahar,
Yusniyati Yusri,
author_sort Nor Irdawati Mahyuddin,
title Financial reporting behaviour and firm’s economic success: Malaysian evidence
title_short Financial reporting behaviour and firm’s economic success: Malaysian evidence
title_full Financial reporting behaviour and firm’s economic success: Malaysian evidence
title_fullStr Financial reporting behaviour and firm’s economic success: Malaysian evidence
title_full_unstemmed Financial reporting behaviour and firm’s economic success: Malaysian evidence
title_sort financial reporting behaviour and firm’s economic success: malaysian evidence
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2020
url http://journalarticle.ukm.my/16734/1/39311-141071-1-PB.pdf
http://journalarticle.ukm.my/16734/
https://ejournal.ukm.my/ajac/issue/view/1350
_version_ 1702170870374465536
score 13.211869

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