The Audit Committees, Internal Audit and External Audit Quality Effects on Earnings Management: An Analysis of Malaysian Government-Linked Companies

asriwn — Tue, 31 Jan 2023 07:45:46 +0000

The role of audit governance mechanisms as part of the corporate governance architecture has been promoted to ensure the integrity of the financial reporting process. In order to get insights on their effectiveness, this study investigates the effects of the audit governance mechanism, specifically audit committee, internal audit function and external audit quality on earnings management in Malaysian government-linked companies. Using a cross-sectional variation of the modified Jones Model (1995) to estimate discretionary accruals, this study examined 38 GLCs from 2009–2018, which consisted of 340 firm-year pair observations. Panel data regression analysis was carried out using the generalised least square method to analyse the effect of audit governance mechanisms on earnings management. The findings suggest that lower likelihood of earnings management is associated with the internal audit function. Further analysis on the proxy of internal audit measures suggests that in-house internal audit function is negatively associated with earnings management. This research would provide insights for regulators and management to strengthen in-house internal audit function in order to mitigate earnings management in Malaysian government-linked companies.

Kesan Pertukaran Pengurusan Tertinggi ke atas Harga Saham Syarikat Berkaitan dan Bukan Berkaitan Kerajaan

Amirulilul — Tue, 11 Oct 2022 06:45:50 +0000

This study was conducted to examine the effects of top management (TM) turnover in the Government (GLC) and the Non-Government-Linked Companies (NGLC) on share prices. Any turnover occurs in this positions will have an impact on the direction of the company because the successor mostly will change the company’s strategy. This and the origin of successor might affect share prices. As compared to NGLC, GLC in Malaysia is controlled directly or indirectly by the Malaysian Government which has capability to appoint board of directors and TM as well to make decision on behalf of GLC. Therefore, the effects of TM turnover on share prices may differ between these companies. Based on the Semi Strong Efficient Market Hypothesis and an event study, secondary data, which consist of share price and top management turnover, were collected. The study revealed that the capital market would react positively before, during and after the announcements of TM turnover. However, the comparison between companies showed that the GLC’s share prices would react positively only prior to the announcement as compared to a positive reaction through out the three periods for NGLC. These findings show that the GLC investor had received the information ahead the announcement and react towards the share prices. Therefore on the announcement date, the information has not contained any surprise. This study also found, the origin of the succesoris positively related to share prices. However, capital market is indifferent on the origin of the successor of GLC and NGLC. Findings from the study contribute to the literature on market reaction towards the top management turnover, especially in the GLC, which control the Malaysian capital market.

government linked companies – Jurnal Pengurusan

The Audit Committees, Internal Audit and External Audit Quality Effects on Earnings Management: An Analysis of Malaysian Government-Linked Companies

Kesan Pertukaran Pengurusan Tertinggi ke atas Harga Saham Syarikat Berkaitan dan Bukan Berkaitan Kerajaan