Purpose-This paper seeks to examine the effects of Malaysian Code on Corporate Governance on the nature of financial restatements in Malaysia and whether corporate governance characteristics are associated with financial restatements. Design/methodology/approach-Data for this paper are obtained from annual reports that had been restated for the period of 2002-2005 with firm-years being the unit of observation. A control group comprising non-restating firms is formed using match-pair procedures where restated and non-restated firms are matched by size, industry, exchange board classification, and financial year end. The data are subsequently analyzed using a t-test, the Pearson correlation and logistic regression. Findings-The results show that the primary reason for misstating the accounts is to inflate earnings. The nomination committee of the firms that restated is found to be less independent with higher managerial ownership. The logistic regression analysis indicates that the extent of ownership by outside blockholders deters firms from misstating accounts. Surprisingly, audit committee independence is associated with the likelihood of financial misstatement. Financial restatements, nevertheless, are not found to be associated with board independence, managerial ownership, and CEO duality. Finally, the results show that firms with high level of debts are more likely to commit in financial misstatement. Practical implications-The research is significant as it provides evidence on the role of corporate governance, especially the independence of the nomination committee and extent of ownership by outside blockholders in Malaysia. It shows that outside blockholders is effective in disciplining managers so that the accounts so prepared are not misleading. The move in 2007 by the Malaysian Government to require companies audit committee to be composed of only independent and non-executive directors, as well as requiring audit committee members to be financially literate, should be seen as important in ensuring the effectiveness of the audit committee. Originality/value-This research is considered as the first study which examines the effects of corporate governance variables on the incidents of financial restatements in a developing country. The findings of this paper would be useful for policy makers in evaluating the importance of corporate governance in emerging countries, specifically on the issue of quality financial reporting.

Purpose -The purpose of this paper is to investigate the extent to which ethnic association (i.e. Chinese and Bumiputra ownerships) and national issues (i.e. the presence of foreign corporations) influence the audit services market in Malaysia. Specifically, the paper aims to examine the effects of ethnicity and foreign ownership on choice of auditor. Design/methodology/approach -Two logit models are used; the first is to test on ethnic auditor (Chinese/non-Chinese) choice while the second is related to the choice of quality-differentiated auditor. The data is obtained from annual reports of the population of the Bursa Malaysia listed companies for both the Main Board and the Second Board for the periods 1993-1995. Findings -The logit regressions confirm our prediction of ethnic networking and preferential treatment on the auditor selection process.Research limitations/implications -The first limitation lies on the auditor choice model where the model is developed from a demand perspective, assuming that the auditors are willing to supply services to any client even though it is very unlikely in the real world. The model also assumes that the audit engagement process for foreign-controlled companies is purely transacted in the Malaysian market. However, foreign multinational corporations might determine the selection of the auditor at the headquarter offices and the Malaysian subsidiaries might simply be directed to engage a given auditor. Another limitation relates to the results of the logit regressions as the study has documented an ethnic association between auditor and auditee rather than establishing a causal relationship. Practical implications -An important implication of these findings relates to auditor independence. The Malaysian Institute of Accountants (MIA) has made rules prescribing the code of professional conduct and ethics of public accountants known as the MIA By-Laws (on Professional Conduct and Ethics) but it seems to neglect the diversity of local culture in addressing independence. Whilst the auditor is divorced from financial and familial interests, the ethnic sentiments might impair auditor independence especially in an audit conflict situation. Originality/value -The paper provides important insights into the existence of Chinese business practices in Malaysia and auditor selection process in this country.

PurposeThe present study examines the effect of the chief executive officer (CEO) career horizon (CH) problem on earnings quality (ERN) for selected family-controlled firms known to have a unique operational goal.Design/methodology/approachThe generalised method of moment linear regression model was used on a sample of family-controlled firms in Malaysia from 2005 to 2016.FindingsThe study found a negative relationship between CH and ERN, measured by earnings persistence and earnings predictability. However, in the earnings predictability model, the reverse was found to be the case after interacting CH with CEO family affiliation, CEO experience and CEO equity. However, the use of a reputable auditor could not mitigate the CH problem. Also, the study obtained a closely related result in the earnings persistence model. The result aligns with the socio-emotional wealth (SEW) theory, which states that the goals of family-controlled firms go beyond financial objectives to include other non-financial objectives, and hence, their commitment to perpetuating their dynasty encourages them to preserve the quality of their earnings.Originality/valueExisting studies on family firms and ERN have treated family firms as homogeneous entities by comparing family and non-family firms, using the underlying theoretical justification of the agency theory. However, this study departs from the agency theory, by considering those factors (i.e. the extent of CEO alignment with family owners and the choice of auditor), using the SEW theory, which establishes the differences among family firms. This work builds on that of Chen et al., (2018) and Ali and Zhang (2015), which suggested that corporate governance can mitigate the CH problem. Therefore, the strength of a CEO's attachment to the family firm (measured by CEO equity ownership and CEO affiliation to family members in family firms) and the choice of the auditor can explain the variation in the effect of the CH problem in family firms.

The study examines the moderating effects of top management support in the relationship between internal quality dimensions and organizational performance in Nigerian federal universities. The study employed a sample of internal audit staff at senior level from 40 federally owned universities in Nigeria where 400 samples have been drawn for the analysis. Questionnaire instrument was used in generating the data having subjected to Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) aimed at establishing underlying dimensions. The data was collected and analysed using inferential statistics and the findings revealed that interaction of internal audit competence, internal audit independence, and internal audit size, with top management support significantly and positively influence organization performance of Nigerian federal universities. The findings provide ground for new policy initiatives to strengthen internal audit and enriched the literature by providing the moderating effect of top management support as instrumental to organizational performance. It is therefore recommended that internal audit competence internal audit independence and internal audit size should be given more attention and mechanism through which these qualities can be employed and sustained for more internal audit service delivery and efficiency in Nigerian federal universities.

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