Institutional factors and conditional conservatism in Malaysia: Does international financial reporting standards convergence matter?

Marzuki, Marziana Madah; Wahab, Effiezal Aswadi Abdul

doi:10.1016/j.jcae.2016.09.004

Cited by 19 publications

(25 citation statements)

References 90 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…For ownership structure, we added politician ownership (PCOWN) as control variable. Prior studies have suggested that politician-owned firms are less likely to implement conservative financial reporting due to lenders being less concerned with downside default risk and protection from public scrutiny [67][68][69]. In addition, we controlled for the ownership of outside shareholders (OUTOWN) and institutional shareholders (INST), since external monitoring mechanisms could exhibit a higher degree of accounting conservatism [70].…”

Section: Methodology Of Testing Modelmentioning

confidence: 99%

Do Political Connections Affect the Conservative Financial Reporting of Family Firms?

et al. 2019

View full text Add to dashboard Cite

This paper investigates the effect of political connections on the association between family firms and conservative financial reporting. While family firms have incentives to reduce agency and litigation-related costs by means of conservative reporting, firms with political connections tend to have opaque financial reporting, which enable them to engage in rent-seeking activities. Using data for Taiwanese listed firms between 1996 and 2012, the final sample observations were 13,877 firm-year observations from a population of 21,393 firm-year observations. We found that political connections weaken the positive relationship between family ownership and conservative financial reporting. This suggests that politically connected family firms make fewer demands for conservative financial reporting. This study contributes to the literature on how political connections affect the family owners’ reporting incentives. Policy makers may consider political connections as an essential factor with respect to establishing governance practice in family firms.

show abstract

Section: Methodology Of Testing Modelmentioning

confidence: 99%

Do Political Connections Affect the Conservative Financial Reporting of Family Firms?

et al. 2019

View full text Add to dashboard Cite

show abstract

“…We posit that the latter view is applicable in the setting of our studies. Prior studies have explored the characteristics of politically connected firms worldwide (Faccio, 2010) and their effect on the capital market in relation to corporate transparency (Bushman et al, 2004), firm performance (Fisman, 2001;Johnson & Mitton, 2003), Wahab, 2016), and earnings quality (Chaney et al, 2011). Gul (2006) examines the impact of political connections on audit fees in Malaysia, and finds that auditors view connected firms as riskier, which results in higher audit fees.…”

Section: Political Connections and Tax Aggressivenessmentioning

confidence: 99%

Political connections, corporate governance, and tax aggressiveness in Malaysia

Wahab

Ariff

Marzuki³

et al. 2017

ARA

Self Cite

View full text Add to dashboard Cite

This study examines the relationship between political connections, corporate governance, and tax aggressiveness among firms listed on the Main Board of Bursa Malaysia. Corporate governance is proxied by firm-level internal and external governance, whereas tax aggressiveness is identified by using the effective tax rates of firms. Data collected from 2000 to 2009 resulted in 2,538 firm-year observations. We find that politically connected firms are more tax aggressive than non-connected firms. Further, we find that a large board size decreases the likelihood of tax aggressiveness, and that an inverse U relationship exists between institutional ownership and tax aggressiveness, which suggests an increase in monitoring as the ownership increases. However, we find no evidence to suggest that corporate governance mitigates the influence of political connections in promoting taxaggressiveness behaviour. Our findings suggest that the impact of political connections could neutralise the benefits of changes in corporate governance in Malaysia.

show abstract

“…However, very little studies have been carried out in developing countries, which provide a different setting due to differences in economic environments, rules and regulation as well as accounting standards. For example, Malaysia as a developing country, where majority of firms are family firm (Haji-Abdullah, Marini & Keshab 2016) and very conservative (Marzuki & Wahab 2017) compare to other developing countries provides an alternative setting to study this issue.…”

Section: Introductionmentioning

confidence: 99%