/jurnalpengurusan Sun, 09 Oct 2022 15:00:46 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.1 /jurnalpengurusan/article/underinvestment-and-value-relevance-of-earnings-management/?utm_source=rss&utm_medium=rss&utm_campaign=underinvestment-and-value-relevance-of-earnings-management Sun, 09 Oct 2022 15:00:46 +0000 /jurnalpengurusan/?post_type=article&p=4540 The aim of this study is to examine whether earnings management among underinvestment firms is positively related to share price. Firms are said to have high growth opportunity but is unable to fund investment projects due to liquidity constraints because of the information asymmetry between the firm and the investors. As a result, firms have to provide high quality accounting information (i.e. value relevant information) to reduce information asymmetry and hence be free from liquidity constraints. One type of accounting information that can be provided is discretionary accrual (proxy for earnings management). The sample of this study is firms listed on the Main Board of Bursa Malaysia from year 2001 to 2007. We use Ohlson’s model to examine the value relevance of earnings management. We separate earnings into managed and unmanaged earnings. Panel data regression analyses were performed to examine the role of underinvestment on the relationship between earnings management and share price. We also examine the value relevance of earnings management using the return model. The results from the panel data regression analysis indicate that earnings management increases the value relevance of accounting information. Further, underinvestment moderates the relationship between earnings management and share price. Nevertheless, the results suggest that earnings management among firms can decrease the value relevance of accounting information. In general, it is concluded that underinvestment weakens the relationship between earnings management and share price/return, hence it motivates managers to convey opportunistic earnings management.

]]> /jurnalpengurusan/article/kerelevanan-maklumat-rizab-penyamaan-keuntungan-dalam-syarikat-induk-perbankan-islam-di-malaysia/?utm_source=rss&utm_medium=rss&utm_campaign=kerelevanan-maklumat-rizab-penyamaan-keuntungan-dalam-syarikat-induk-perbankan-islam-di-malaysia Sat, 08 Oct 2022 14:24:43 +0000 /jurnalpengurusan/?post_type=article&p=2813 Profit equalization reserve (PER) is a reserve allocated from profit during good times to be used during difficult times. In Islamic financial institutions, the concept of profit sharing is used in most contracts because interest or riba’ is prohibited. When return in the conventional financial institutions which is based on a predetermined rate is high, there is a tendency for the Islamic financial institutions (as Mudharib) to sacrifice their share of profit in order to pay a rate of return equivalent to a competitive rate of return. As such, PER is allowed by the authorities in Islamic financial institutions to make sure they have enough reserves to be used during difficult times, and be able to retain their customer base. Although prior literature found investors discount prices due to earnings management practices, the benefit of competition advantage to the Islamic financial institutions by having PER could reverse or off-set the effect. Thus, there is a question whether investors regard this information as relevant in their decision making. This study examines the relevance of the PER financial information to investors. In addition, this study also investigates the effect of a new guideline on PER imposed by the central bank of Malaysia i.e. Bank Negara Malaysia (BNM) in 2011. The new guideline of PER implementation suggests different treatment of PER provision by investors and PER by Mudharib that affect items in the financial statements and subsequently investors judgment. Using data of listed bank holding companies from 2001 to 2014 i.e. 102 observations, the findings show PER provision is negatively related to share prices. This relationship is stronger after enforcement of the new guideline. Consistent to prior literature, this suggests PER is perceived as a tool to manage earnings. The implication is that the regulator has to give serious attention in the decision either to stop or continue the use of PER provision. Although the objective is good for the bank, it can potentially be misused by the management to manage bank’s earnings and return. Following the adoption of new guidelines in 2011, the relationship between PER provided and share prices has been strengthened.

]]>