Purpose -Conflicts between managers and outside auditors may exist in choosing alternative accounting procedures. Since auditors are appointed by the firm, they are subject to dismissal if divergent opinions cannot be resolved. To a lesser extent, financial reports are often negotiated. In order to produce unbiased financial reports, audit committee members are appointed to act independently in order to resolve conflicts between the managers and outside auditors. This study aims to assess the effectiveness of some audit committee characteristics, i.e. the independence of members, size, frequency of meeting and knowledge of the members, to monitor management behavior with respect to their incentives to manage earnings. Design/methodology/approach -This paper uses discretionary accruals obtained from the established model as a signal of the presence of earnings management. Findings -The evidence shows that the presence of a fully independent audit committee reduces earnings management practices. It was also found that firms which had more knowledgeable audit committee members and held more audit committee meetings recorded fewer earnings management practices compared with other firms. Originality/value -This paper is different from prior studies, in that it makes a significant contribution towards enhancing one's knowledge in the interacting role of audit committee characteristics.

Financial statement frauds (FSF)

The main objective of this study is to examine the influences of committees that are being appointed to manage risk towards voluntary risk management disclosure (VRMD) among non-financial companies in Malaysia. Non-financial companies will usually appoint either Risk Management Committee (RMC) or Audit Committee (AC) to manage their risks. Based on resource dependence theory, this study contends that the committees provide risk management resources particularly in terms of risk management information that could influence the VRMD. All data of VRMD, RMC and AC were collected from companies' annual reports by using content analysis method. The sample in this study consisted of 395 non-financial companies which were listed on Bursa Malaysia in 2011. Our multiple regression results show that RMC presence and AC activeness increase VRMD. Our findings provide evidence that the establishment of RMC could increase the risk management disclosure among companies in Malaysia.

Purpose The purpose of this paper is to examine the effect of related party transactions (RPTs) and types of RPTs (complex, simple and loan) on earnings quality in four East Asian countries: Hong Kong, Malaysia, Singapore and Thailand. Design/methodology/approach RPTs and types of RPTs are measured using two approaches, magnitude and abnormal (magnitude change). Earnings quality is measured using proxies for accrual earnings management and identified as discretionary accruals (DAC) and performance matched discretional accruals (PMDAC). Findings The results suggest that firms in these countries experience poor earnings quality when they are engaged in RPT. The effect of RPT-simple on earnings quality is more severe than RPT-complex. However, the presence of higher investor protection and stricter enforcement of regulations in countries like Singapore and Hong Kong reduce the negative impact of RPTs on earnings quality. Research limitations/implications The results support the argument that the presence of controlling shareholders in East Asia is likely to lead to engagement with RPTs, which will increase the likelihood of firms’ earnings manipulation via DAC. This study has two limitations. It only focuses on Hong Kong, Malaysia, Singapore and Thailand, and the results may not be generalizable to other countries. Second, this study only measures the magnitude and abnormal RPTs based on the disclosures available in annual reports. Originality/value This paper contributes to the literature by examining the effect of RPTs and types of RPTs on earnings quality in four selected East Asian countries.

We examine the relationship between board of directors' good governance characteristics and going concern problems of 56 companies listed on Bursa Malaysia in 2004 with going concern problems and 56 companies without going concern problems. Characteristics of corporate governance included in this study are composition of independent directors, CEO duality, T.M. Iskandar et al.management equity ownership, and institutional investor equity ownership. The use of going concern audit opinion to measure the company financial performance enhances the accuracy of measurements previously employed. Findings indicate that the practice of CEO duality may impair the independence of board of directors. Results suggest that equity ownerships by the management and institutional investors form internal and external mechanisms respectively to improve the company financial performance.Reference to this paper should be made as follows: Iskandar, T.M., Rahmat, M.M., Noor, N.M., Saleh, N.M. and Ali, M.J. (2011) 'Corporate governance and going concern problems: evidence from Malaysia', Int. J.