Purpose This paper aims to examine the effects of corporate governance and firm-specific characteristics on the incidence of financial restatement among Malaysian public listed firms. Design/methodology/approach The elements of corporate governance consist of board size, board independence, multiple directorships, audit committee expertise, external audit quality and executive compensation. Meanwhile, the firm-specific characteristics consist of firm age, firm performance, firm leverage and firm liquidity. The agency theory has been used to guide the study. This study used a matched-pair sample that consisted of a sample of 49 restatement firms and 98 non-restatement firms between the years 2011 and 2016. Univariate (t-test and Pearson correlation) and multivariate (logistic regression) statistical techniques were used to test the hypotheses. Findings The results show that there is a negative and significant relationship between executive compensation and firm performance, and the incidence of financial restatement. In addition, there is a positive and significant relationship between firm leverage and the incidence of financial restatement. However, the other corporate governance and firm-specific characteristic variables included in the study were found to be insignificant with the incidence of financial restatement. This paper provides evidence that some form of corporate governance mechanisms and firm-specific characteristics, particularly executive compensation, firm performance and firm leverage, may influence the direction and magnitude of the incidence of financial restatement. The findings indicate that optimal executive incentives may align management interests with those of shareholders. In addition, greater performance and lower leverage levels minimise firms’ financial pressure and debt covenant violation risk, which may reduce the management tendency to misstate the financial statement, and consequently, minimise the likelihood of financial restatement. Originality/value The main value of this paper is the effect of corporate governance and firm-specific characteristics on the likelihood of financial restatement in Malaysia. The findings of this study provide useful insights for regulators to improve and reconsider the current regulations on corporate governance mechanisms.

This study examines seven factors associated with financial restatements in Malaysian publicly listed companies (PLCs). We hypothesize that two factors proxy for management rationalization, two for management motives and three for the opportunity to predict financial restatements. Our sample consists of 85 restatement firms and 85 no-restatement firms, listed on the Bursa Malaysia and have a complete set of data from 2005-2011. The objective of this study is to examine how rationalization, motive and weak governance lead to financial restatements in emerging economies, like Malaysia. With regard to rationalization, we find that founders are negatively and significantly associated with financial restatements while related party transactions (RPTs) are positively and significantly associated. Additionally, we find evidence that opportunity for restatement proxied by audit quality is negatively and significantly associated with financial restatements.

This study aims to examine the relationship between factors of pressure, opportunity, and rationalization, and the occurrence of real earnings management among Malaysian public listed companies. The study used a sample of 557 Malaysian public listed companies between 2017 and 2019, comprising a total of 1,671 firm-year observations. Replicating a study by Khanh and Nguyen (2018), but not limited to external governance of audit quality, the study added to the knowledge of real earnings management by taking into account the effect of internal governance such as board independence and multiple directorships. And, following Roychowdhury (2006), real earnings management is measured by abnormal cash flow from operations, abnormal production costs, and abnormal discretionary expenditure. The results from regression analysis show that there is a negative and significant association between financial performance, measured by return on assets, and real earnings management. In addition, the results also show that there is a positive and significant association between audit quality, measured by audit firm size, and real earnings management. The findings of this study provide useful insights for the investors to reassess firm corporate governance, and for the regulators to reconsider the current regulations with regard to the practice of real earnings management.

This study presents a review of stock market liquidity in emerging countries. Specifically, it highlights the factors that lead to the occurrence of a liquid market in emerging countries. Following a study by Ding, Ni, and Zhong (2016), this study argues that firms are motivated to have liquid stock to enable them to raise funds at a lower cost, so as to exploit growth opportunities. This paper contributes additional knowledge in terms of understanding stock market liquidity and offers some suggestions for future research. A systematic literature review (SLR) was adopted on stock market liquidity and its related causes and effects, encompassing the years 2010 to 2021. Based on the SLR, it is noted that the features and practices of firms, as well as the policies and regulations that are imposed by regulatory bodies and governments in emerging countries, are important. The limitation of this study is that only four micro-environmental factors and two macro-economic factors were reviewed. Therefore, it is suggested that in the future, researchers should focus on other factors, such as financial performance and political connection. The identification of factors in this study highlighted the gaps in current practices, thus, motivating future research to scrutinise issues relating to stock market liquidity more intensively

This study examined factors related to the occurrence of material accounting misstatements in Malaysian public listed companies (PLCs). Two factors, motivation and opportunity, were assessed in this study. According to Jensen (1993), as the consequences of material accounting misstatement can be extremely detrimental to the firms and their employees, the occurrence of such affairs must be driven by strong motivation and a great opportunity. The motivation factors consist of managerial overconfidence and financial distress, while the opportunity factors include internal and external corporate governance practices. A total of 103 misstatement and 103 non-misstatement firms, gathered from 2010 to 2018, were examined. Univariate and binary logistic regression analyses were deployed to test the hypotheses. Evidently, highly financial distress, a higher proportion of board independence, the practice of CEO duality, and a larger size of borrowings exerted a significantly positive relationship with material accounting misstatements. Interestingly, a higher proportion of independent board members encouraged the likelihood of material accounting misstatements instead of mitigating such mishaps. This study provides insights to regulators on the efficacy of corporate governance practices in curbing material accounting misstatements. The study addresses the element of managerial overconfidence, which was previously limited to studies on capital structure and leverage decisions.

This paper discusses issues concerning audit committee characteristics that lead to the occurrence of financial restatements in Malaysian public listed companies (PLCs). The audit committee characteristics were measured using size, independence, frequency of meetings, audit tenure, gender, expertise, age, ethnicity, legal qualifications, and political connections. The data in this study were extracted from the annual reports of 100 firms that had restated their financial statement between 2006 and 2015, and a total of 200 non-restatement firms were matched and observed as control firms. Using univariate and multivariate statistical analysis, the results evince that there is a significant association between audit committee size and frequency of meetings as well as ethnicity and political connections of the audit committee members and the occurrence of financial restatements in Malaysian PLCs. However, the remaining audit committee characteristics show insignificant association with the occurrence of financial restatements. Consistent with Wan Mohammad, Wasiuzzaman, and Nik Salleh (2016), the results show that larger and more rigorous audit committees can strengthen the monitoring role and consequently reduce the occurrence of financial restatements. In addition, the results evince that Malay members in the audit committee have widespread political connections, which negatively affect the decisions by the audit committee, thereby increasing the occurrence of financial restatements.

This study examines the relationship between financial restatement and firm value in Malaysian public listed firms. In addition, it assesses the moderating effects provided by corporate governance mechanisms on the relationship of financial restatements and firm value. The study covers the period 2009-2015 and involves 142 public listed companies in Bursa Malaysia with financial restatements. The findings reveal that financial restatements do adversely impact firm value and that financial restatements negatively and significantly affect firm value. In terms of moderating variables, we find that the interaction between financial restatement and family ownership is negatively associated with firm value. In addition, this study also finds that the interaction between financial restatement and institutional ownership is positively and significantly associated with firm value. In conclusion, in the Malaysian context, this study establishes that financial restatement has a negative impact on firm value.

This study examines the relationship between financial restatement and firm value in Malaysian public listed firms. In addition, it assesses the moderating effects provided by corporate governance mechanisms on the relationship of financial restatements and firm value. The study covers the period 2009-2015 and involves 142 public listed companies in Bursa Malaysia with financial restatements. The findings reveal that financial restatements do adversely impact firm value and that financial restatements negatively and significantly affect firm value. In terms of moderating variables, we find that the interaction between financial restatement and family ownership is negatively associated with firm value. In addition, this study also finds that the interaction between financial restatement and institutional ownership is positively and significantly associated with firm value. In conclusion, in the Malaysian context, this study establishes that financial restatement has a negative impact on firm value