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Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index

The principle role of financial reporting is to provide investors with useful information for investment decision makings. In this study, we examine whether corporate governance moderates the relationship between firm characteristics and financial reporting quality. We use earnings management as mea...

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Main Authors: Ishak, Rokiah, Amran, Noor Afza, Abdul Manaf, Kamarul Bahrain
Format: Article
Language:English
Published: Academic Research Publishing Group 2018
Subjects:
HF5601 Accounting
Online Access:http://repo.uum.edu.my/26025/1/IJSSR%206S%202018%20924%20932.pdf
http://repo.uum.edu.my/26025/
http://doi.org/10.32861/jssr.spi6.924.932
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spelling my.uum.repo.260252019-05-08T07:12:19Z http://repo.uum.edu.my/26025/ Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index Ishak, Rokiah Amran, Noor Afza Abdul Manaf, Kamarul Bahrain HF5601 Accounting The principle role of financial reporting is to provide investors with useful information for investment decision makings. In this study, we examine whether corporate governance moderates the relationship between firm characteristics and financial reporting quality. We use earnings management as measure for financial reporting quality. This study uses secondary data obtained from Thompson Database. The sample of this study is firms listed on the Main Market of Bursa Malaysia from 2012 to 2015. The results of our study reveal that there is a positive value of abnormal cash flow which indicates that companies do practice earnings management through manipulation of cash flow from operations. Large firms are practicing earnings management. Factors such as many business segments and business complexity have encouraged large firms to manage their earnings by manipulating their cash flow from operation. In contrast, firms with high leverage and firms audited by Big 4 are less likely to involve with earnings management. Interestingly, when corporate governance index is used as moderating variable, our result shows that only firms audited by Big 4 are related to earnings management. In terms of the contribution of the study, this study is important for the development of Malaysian capital market and it help investors to better understand how the impact of corporate governance mechanisms on financial reporting quality varies across firms. Academic Research Publishing Group 2018 Article PeerReviewed application/pdf en cc4_by http://repo.uum.edu.my/26025/1/IJSSR%206S%202018%20924%20932.pdf Ishak, Rokiah and Amran, Noor Afza and Abdul Manaf, Kamarul Bahrain (2018) Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index. The Journal of Social Sciences Research (SPI6). pp. 924-932. ISSN 24136670 http://doi.org/10.32861/jssr.spi6.924.932 doi:10.32861/jssr.spi6.924.932
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
topic HF5601 Accounting
spellingShingle HF5601 Accounting
Ishak, Rokiah
Amran, Noor Afza
Abdul Manaf, Kamarul Bahrain
Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
description The principle role of financial reporting is to provide investors with useful information for investment decision makings. In this study, we examine whether corporate governance moderates the relationship between firm characteristics and financial reporting quality. We use earnings management as measure for financial reporting quality. This study uses secondary data obtained from Thompson Database. The sample of this study is firms listed on the Main Market of Bursa Malaysia from 2012 to 2015. The results of our study reveal that there is a positive value of abnormal cash flow which indicates that companies do practice earnings management through manipulation of cash flow from operations. Large firms are practicing earnings management. Factors such as many business segments and business complexity have encouraged large firms to manage their earnings by manipulating their cash flow from operation. In contrast, firms with high leverage and firms audited by Big 4 are less likely to involve with earnings management. Interestingly, when corporate governance index is used as moderating variable, our result shows that only firms audited by Big 4 are related to earnings management. In terms of the contribution of the study, this study is important for the development of Malaysian capital market and it help investors to better understand how the impact of corporate governance mechanisms on financial reporting quality varies across firms.
format Article
author Ishak, Rokiah
Amran, Noor Afza
Abdul Manaf, Kamarul Bahrain
author_facet Ishak, Rokiah
Amran, Noor Afza
Abdul Manaf, Kamarul Bahrain
author_sort Ishak, Rokiah
title Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
title_short Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
title_full Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
title_fullStr Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
title_full_unstemmed Firm characteristics and financial reporting quality: the moderating role of Malaysian corporate governance index
title_sort firm characteristics and financial reporting quality: the moderating role of malaysian corporate governance index
publisher Academic Research Publishing Group
publishDate 2018
url http://repo.uum.edu.my/26025/1/IJSSR%206S%202018%20924%20932.pdf
http://repo.uum.edu.my/26025/
http://doi.org/10.32861/jssr.spi6.924.932
_version_ 1644284485083070464
score 13.244404

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