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Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?

Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analys...

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Main Authors: Sabrun, Ibrahim Mohd, Muhamad, Rusnah, Yusoff, Haslinda, Darus, Faizah
Format: Article
Published: Faculty of Business and Accountancy, University of Malaya 2018
Subjects:
HF Commerce
Business
Online Access:http://eprints.um.edu.my/20843/
https://doi.org/10.22452/ajba.vol11no1.1
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spelling my.um.eprints.208432019-04-09T03:11:00Z http://eprints.um.edu.my/20843/ Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? Sabrun, Ibrahim Mohd Muhamad, Rusnah Yusoff, Haslinda Darus, Faizah HF Commerce Business Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analysed. Design/Methodology/Approach: This study uses the Modified Jones model (Jones, 1991; Dechow, Sloan, & Sweeney, 1996), Roychowdhury’s model (2006) to examine earnings management behaviour of Shariah-compliant companies. Research findings: The results of this study suggest that company’s reputation, financial distress and financial performance are factors that can influence company’s earnings management behaviour and that Shariah values are ineffective in deterring the management from earnings management behaviour. Theoretical contribution/Originality: The findings of this study contribute to the literature by showing that Shariah values may not be beneficial in shaping good business management and reporting practices. Practitioner/Policy implications: The alarming results drawn from this study is a reason for policy setters and relevant accounting bodies to give more emphasis on developing better accounting and reporting policies. Research limitation: This study is limited to non-financial sectors due to measurement limitations. Faculty of Business and Accountancy, University of Malaya 2018 Article PeerReviewed Sabrun, Ibrahim Mohd and Muhamad, Rusnah and Yusoff, Haslinda and Darus, Faizah (2018) Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? Asian Journal of Business and Accounting, 11 (1). pp. 1-36. ISSN 1985-4064 https://doi.org/10.22452/ajba.vol11no1.1 doi:10.22452/ajba.vol11no1.1
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic HF Commerce
Business
spellingShingle HF Commerce
Business
Sabrun, Ibrahim Mohd
Muhamad, Rusnah
Yusoff, Haslinda
Darus, Faizah
Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
description Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analysed. Design/Methodology/Approach: This study uses the Modified Jones model (Jones, 1991; Dechow, Sloan, & Sweeney, 1996), Roychowdhury’s model (2006) to examine earnings management behaviour of Shariah-compliant companies. Research findings: The results of this study suggest that company’s reputation, financial distress and financial performance are factors that can influence company’s earnings management behaviour and that Shariah values are ineffective in deterring the management from earnings management behaviour. Theoretical contribution/Originality: The findings of this study contribute to the literature by showing that Shariah values may not be beneficial in shaping good business management and reporting practices. Practitioner/Policy implications: The alarming results drawn from this study is a reason for policy setters and relevant accounting bodies to give more emphasis on developing better accounting and reporting policies. Research limitation: This study is limited to non-financial sectors due to measurement limitations.
format Article
author Sabrun, Ibrahim Mohd
Muhamad, Rusnah
Yusoff, Haslinda
Darus, Faizah
author_facet Sabrun, Ibrahim Mohd
Muhamad, Rusnah
Yusoff, Haslinda
Darus, Faizah
author_sort Sabrun, Ibrahim Mohd
title Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
title_short Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
title_full Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
title_fullStr Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
title_full_unstemmed Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
title_sort do shariah-compliant companies engage lesser earnings management behaviour?
publisher Faculty of Business and Accountancy, University of Malaya
publishDate 2018
url http://eprints.um.edu.my/20843/
https://doi.org/10.22452/ajba.vol11no1.1
_version_ 1643691396775804928
score 13.211869

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