From instrumentalism to realism in accounting

Abstract

This study investigates the technical efficiency for each industry in the Malaysian manufacturing sector is estimated by using Data Envelopment Analysis (DEA). In order to pursue a balance of innovation between long-term and short-term performance strategy, we integrate the Balance Scorecard (BSC) approach with DEA. Furthermore, this paper looks at the determinants of efficiency using the Tobit regression model. In measuring the level of firms' efficiency and innovation, the wood and wood based products industry is emphasized due to its importance in the economic growth of manufacturing sector. In the wood and wood based products industry, the highest level of technical efficiency was achieved by two sub-sectors i.e. veneer sheets and plywood and laminboard, particle board and other panels board, with the mean value of technical efficiency of 1.081 and 1.097 respectively. Generally, the majority of the manufacturing firms are operating technical inefficiently. The distribution of DEA and DEA-BCS technical efficiency in Malaysian Manufacturing Industries show that most of the industries have the average technical efficiency scores greater than 1.05 with only 7 industries (13.21%) in DEA-BSC model operating at or near to the most optimal productions. © 2015 The Authors. This is an open access article under the terms of the Creative Commons Attribution License 4.0, which allows use, distribution and reproduction in any medium, provided the original work is properly cited. DOI: http://dx.doi.org/10.18533/jefs.v3i03.109 IntroductionPrevious research acceded that there are myriad of definitions and usage of the term innovation (Jain, 2010). Although formal definitions of innovation appear diverse, one common element in all definition of innovation is novelty. For the purpose of this study, innovation is defined as "the commercially successful exploitation of new technologies, ideas or methods through the introduction of new products or process, or through the improvement of existing ones.There is clear evidence that innovation play a crucial role to long term profitability and growth in firms (Freel, 2000). There can be little doubt that today's firms must be able to move in the world of innovation. The successful firms will be firms which fully understand innovative business differs from non innovative business and is able to respond accordingly thereby successfully "being innovative".The importance of manufacturing sector in contributing to Malaysian economic growth is not deniable. With this rapid expansion of the manufacturing sector in the last three decades has transformed Malaysia from an Innovation and technical efficiency … Munisamy et al., JEFS (2015), 03(04), 50-67Journal of Economic and Financial Studies. Page 51agricultural based economy to a rapidly industrializing country (Ministry of International Trade and Industry, 2008) During the period of 1996 to 2005, the trade and economic policy undertook progressive liberalization to achieve the long-term objectives of freer and open trade as well as stren...

Relativity of Accounting Values: Causes, Consequences and Limitation Possibilities

“…The auditors cannot obtain an absolute assurance, especially because there are inherent limitations of an audit caused by factors such as: the use of sampling; the shortcomings of any accounting and internal control system; the fact that most evidence is persuasive rather than conclusive -based on deductions rather than beliefs; the need for the audit to be conducted within a reasonable period of time and at a reasonable cost) and the fact that the opinion is based on professional judgment used in obtaining sufficient appropriate evidence (e.g., decision of nature, timing and extent of the audit procedures) and drawing conclusions based on the evidence obtained (e.g., evaluating the reasonableness of the accounting estimates when preparing the financial statements). Thus, the examination made by professional, in order to appreciate the compliance with regulations, can lead to an increased confidence in a more or less faithful image of the financial position, performance and changes in financial position of an organization (Enachi & Andone, 2015). According to IAASB (2018), the professional judgment represents the application of relevant training, knowledge and experience, within the context provided by auditing, accounting and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement.…”

“…Accounting values are the result of the professional judgments used in preparing and applying regulations, but also in the examination made in order to appreciate the compliance with regulations. So, the quality of the professional judgments exercised in creating and implementing a system for accounting representation of reality, although partially controlled, is essential in increasing the reliability of the information provided by accounting (Enachi & Andone, 2015). To support the preparers, auditors, regulators and standard setters, The Institute of Chartered Accountants of Scotland (2012) elaborated a professional judgement framework for financial reporting.…”