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Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?

Research aims: This study examines whether managerial and institu-tional ownership is associated with higher earnings quality (EQ) after the implementation of International Financial Reporting Standards (IFRS), in comparison to the pre-IFRS period. It also examines the moderating effect of investor...

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Main Authors: Abd Alhadi, Saleh, Senik, Rosmila, Johari, Jalila, Nahar, Hairul Suhaimi
Format: Article
Language:English
Published: University of Malaya 2020
Online Access:http://psasir.upm.edu.my/id/eprint/87040/1/Ownership%20structure%20and%20earnings%20quality%20pre.pdf
http://psasir.upm.edu.my/id/eprint/87040/
https://ajba.um.edu.my/article/view/18519
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spelling my.upm.eprints.870402022-01-13T06:45:50Z http://psasir.upm.edu.my/id/eprint/87040/ Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter? Abd Alhadi, Saleh Senik, Rosmila Johari, Jalila Nahar, Hairul Suhaimi Research aims: This study examines whether managerial and institu-tional ownership is associated with higher earnings quality (EQ) after the implementation of International Financial Reporting Standards (IFRS), in comparison to the pre-IFRS period. It also examines the moderating effect of investor protection (INPT) on the link between ownership structure and EQ. Design/Methodology/Approach: This study uses a dynamic panel data modelling on a sample of 2090 firm-year observations, from 2007–2016, in Malaysia. This study applies the generalized method of moments (GMM) to deal with the econometric problems. Research findings: The results indicate that managerial ownership is essential for improving EQ before and after IFRS adoption. No significant improvement is noted for institutional shareholders. The results provide evidence showing that managerial ownership is more efficient in monitoring earnings management in a healthy INPT environment. Theoretical contribution/Originality: The findings highlight the complementary influence of firm- and country-level governance mechanisms in improving firm’s EQ. The results suggest that the agency theory and the institutional theory could be used together in emerging economies. This is because even good CG cannot improve the monitoring performance in countries with weak institutional settings. Practitioner/Policy implication: The results highlight the significance of accounting standards and law enforcement for enhancing the monitoring role of ownership structure in improving EQ. Research limitation/Implications: This study investigates the impact of ownership structure on EQ. Further research should seek to under-stand other CG variables used in other countries with other EQ proxies such as real earnings management. University of Malaya 2020-06-26 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/87040/1/Ownership%20structure%20and%20earnings%20quality%20pre.pdf Abd Alhadi, Saleh and Senik, Rosmila and Johari, Jalila and Nahar, Hairul Suhaimi (2020) Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter? Asian Journal of Business and Accounting, 13 (1). 97 - 132. ISSN 1985-4064; ESSN: 2180-3137 https://ajba.um.edu.my/article/view/18519 10.22452/ajba.vol13no1.4
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Research aims: This study examines whether managerial and institu-tional ownership is associated with higher earnings quality (EQ) after the implementation of International Financial Reporting Standards (IFRS), in comparison to the pre-IFRS period. It also examines the moderating effect of investor protection (INPT) on the link between ownership structure and EQ. Design/Methodology/Approach: This study uses a dynamic panel data modelling on a sample of 2090 firm-year observations, from 2007–2016, in Malaysia. This study applies the generalized method of moments (GMM) to deal with the econometric problems. Research findings: The results indicate that managerial ownership is essential for improving EQ before and after IFRS adoption. No significant improvement is noted for institutional shareholders. The results provide evidence showing that managerial ownership is more efficient in monitoring earnings management in a healthy INPT environment. Theoretical contribution/Originality: The findings highlight the complementary influence of firm- and country-level governance mechanisms in improving firm’s EQ. The results suggest that the agency theory and the institutional theory could be used together in emerging economies. This is because even good CG cannot improve the monitoring performance in countries with weak institutional settings. Practitioner/Policy implication: The results highlight the significance of accounting standards and law enforcement for enhancing the monitoring role of ownership structure in improving EQ. Research limitation/Implications: This study investigates the impact of ownership structure on EQ. Further research should seek to under-stand other CG variables used in other countries with other EQ proxies such as real earnings management.
format Article
author Abd Alhadi, Saleh
Senik, Rosmila
Johari, Jalila
Nahar, Hairul Suhaimi
spellingShingle Abd Alhadi, Saleh
Senik, Rosmila
Johari, Jalila
Nahar, Hairul Suhaimi
Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
author_facet Abd Alhadi, Saleh
Senik, Rosmila
Johari, Jalila
Nahar, Hairul Suhaimi
author_sort Abd Alhadi, Saleh
title Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
title_short Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
title_full Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
title_fullStr Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
title_full_unstemmed Ownership structure and earnings quality pre- and post-IFRS: does investor protection matter?
title_sort ownership structure and earnings quality pre- and post-ifrs: does investor protection matter?
publisher University of Malaya
publishDate 2020
url http://psasir.upm.edu.my/id/eprint/87040/1/Ownership%20structure%20and%20earnings%20quality%20pre.pdf
http://psasir.upm.edu.my/id/eprint/87040/
https://ajba.um.edu.my/article/view/18519
_version_ 1724075490768060416
score 13.211869

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