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Disclosure of extraordinary items and income smoothing behaviour in Malaysia

This paper investigates disclosure practice of extraordinary items (EI) by listed companies in Malaysia during which the original standard on EI, SI 8 – Unusual and Prior Period Items and Changes in Accounting Policies was still in place. Until the adoption of the revised standard in 1997 (revise...

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Main Authors: Shamsul Nahar Abdullah,, Ku Nor Izah Ku Ismail,, Nor Asma Lode,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2002
Online Access:http://journalarticle.ukm.my/2474/1/JP21-03.pdf
http://journalarticle.ukm.my/2474/
http://www.ukm.my/penerbit/jurus.htm
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spelling my-ukm.journal.24742016-12-14T06:31:43Z http://journalarticle.ukm.my/2474/ Disclosure of extraordinary items and income smoothing behaviour in Malaysia Shamsul Nahar Abdullah, Ku Nor Izah Ku Ismail, Nor Asma Lode, This paper investigates disclosure practice of extraordinary items (EI) by listed companies in Malaysia during which the original standard on EI, SI 8 – Unusual and Prior Period Items and Changes in Accounting Policies was still in place. Until the adoption of the revised standard in 1997 (revised SI 8 and subsequently replaced by the MASB 3), the definition of EI given in the original SI 8 was very loose and it was opened to abuse. This paper also reports on whether EI disclosures were associated with income smoothing behaviour and the extent to which disclosure of EI was related to political costs, gearing and management interest. A total of 244 Kuala Lumpur Stock Exchange (KLSE) listed companies that disclosed EI at least once from 1991 to 1995 were included in this study. The study found that the incidence of EI was very high. However, the results showed no evidence of management using EI as a tool to smooth income. Further, EI disclosures were not explained by political costs, gearing and management interest. As there was no evidence of the use of EI to smooth income in Malaysia, the belief that the new standard (that restricts the definition of EI) would curb the practice of income smoothing is not relevant. The adoption of the new standard could only be expected to enhance the level of reporting comparability and consistency among Malaysian companies Penerbit Universiti Kebangsaan Malaysia 2002-07 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/2474/1/JP21-03.pdf Shamsul Nahar Abdullah, and Ku Nor Izah Ku Ismail, and Nor Asma Lode, (2002) Disclosure of extraordinary items and income smoothing behaviour in Malaysia. Jurnal Pengurusan, 21 . pp. 57-75. ISSN 0127-2713 http://www.ukm.my/penerbit/jurus.htm
institution Universiti Kebangsaan Malaysia
building Perpustakaan 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 This paper investigates disclosure practice of extraordinary items (EI) by listed companies in Malaysia during which the original standard on EI, SI 8 – Unusual and Prior Period Items and Changes in Accounting Policies was still in place. Until the adoption of the revised standard in 1997 (revised SI 8 and subsequently replaced by the MASB 3), the definition of EI given in the original SI 8 was very loose and it was opened to abuse. This paper also reports on whether EI disclosures were associated with income smoothing behaviour and the extent to which disclosure of EI was related to political costs, gearing and management interest. A total of 244 Kuala Lumpur Stock Exchange (KLSE) listed companies that disclosed EI at least once from 1991 to 1995 were included in this study. The study found that the incidence of EI was very high. However, the results showed no evidence of management using EI as a tool to smooth income. Further, EI disclosures were not explained by political costs, gearing and management interest. As there was no evidence of the use of EI to smooth income in Malaysia, the belief that the new standard (that restricts the definition of EI) would curb the practice of income smoothing is not relevant. The adoption of the new standard could only be expected to enhance the level of reporting comparability and consistency among Malaysian companies
format Article
author Shamsul Nahar Abdullah,
Ku Nor Izah Ku Ismail,
Nor Asma Lode,
spellingShingle Shamsul Nahar Abdullah,
Ku Nor Izah Ku Ismail,
Nor Asma Lode,
Disclosure of extraordinary items and income smoothing behaviour in Malaysia
author_facet Shamsul Nahar Abdullah,
Ku Nor Izah Ku Ismail,
Nor Asma Lode,
author_sort Shamsul Nahar Abdullah,
title Disclosure of extraordinary items and income smoothing behaviour in Malaysia
title_short Disclosure of extraordinary items and income smoothing behaviour in Malaysia
title_full Disclosure of extraordinary items and income smoothing behaviour in Malaysia
title_fullStr Disclosure of extraordinary items and income smoothing behaviour in Malaysia
title_full_unstemmed Disclosure of extraordinary items and income smoothing behaviour in Malaysia
title_sort disclosure of extraordinary items and income smoothing behaviour in malaysia
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2002
url http://journalarticle.ukm.my/2474/1/JP21-03.pdf
http://journalarticle.ukm.my/2474/
http://www.ukm.my/penerbit/jurus.htm
_version_ 1643735386370867200
score 13.211869

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