Fraudulent financial reporting is a major concern for two primary regulators of Malaysia's capital market -the Securities Commission (SC) and Bursa Malaysia. Both authorities continue to refine the parameters that will ensure rigorous surveillance over public listed firms. The objective of current study is to examine the association between financial statement analysis and fraudulent financial reporting. Many researchers found indication of financial ratios to detect fraudulent financial reporting but others also have concluded otherwise. Most of these studies were conducted outside of Malaysia. The sample comprises of the Malaysian Public Listed firms and data used ranged between year 2000 to 2011. The result indicated that several financial ratios such as total debt to total asset, and receivables to revenue were found to be significant predictors to detect fraudulent financial reporting. This reflects that, financial ratios maybe helpful in the detection of fraudulent financial reporting. These findings add to the extant literature on the ability of financial ratios to detecting fraud. Index Terms-financial statement analysis, fraudulent financial reporting, public listed companies, Malaysia
Abstract. This study examines the relationships between financial distress and financial ratio (liquidity, leverage, profitability, firm's performance, and dividend) among public listed companies, using the Altman Z-Score to determine the financial distress levels among public listed companies in Malaysia. Five-year data has been collected (2010 to 2014) from the annual financial statements and from Data Stream of public listed companies in Malaysia. The findings indicate significant relationships between liquidity, leverage, profitability, firm's performance, and dividend with the financial distress levels among the companies in question. This study also examines the interaction effects of financial ratios and the year after implementation of the Malaysian Code on Soheil Kazemian, Noor Shauri, Zuraidah Sanusi, Amrizah Kamaluddin, Shuhaida Shuhdan
Monitoring mechanisms and financial distress of public listed companies in Malaysia
93Corporate Governance (MCCG) in 2012 on financial distress levels. The results suggest that only liquidity and firm's performance have stronger effects on financial distress levels in two years after MCCG implementation. This indicates that after the implementation of the Code, liquidity and firms' performance ratios had strong and significant effect on financial distress levels. Overall, this study could help investors, creditors as well as external regulators in monitoring companies from being classified as financially distressed companies.
The purpose of this study to examine the relationship of cash flow ratios in predicting financial distress companies, with industrial and consumer product companies in Bursa Malaysia as the sample. The study on financial distress is critical as it can lead to bankruptcy, which may adversely affect the economy of the country. Therefore it is worth exploring any indicators that can identify the possibility of financial distress in the company. The tools enable to address the potential problems that can mitigate from distressed financial position. Most prior studies in Malaysia focus on traditional financial ratios, while this study exploits the strength of cash flow ratios. The liquidity ratio, solvency ratio, efficiency ratio and profitability ratio utilized in this study are derived from the statement of cash flows. The Altman Z-score is used to measure the level of the financial distress. The findings show mixed relationships between solvency ratio and financial distress and a negative significant relationship between profitability ratio and financial distress, whilst efficiency ratio has no relationship with the financial distress. These results suggest that cash flow ratios are reliable tools to predict financial distress for Malaysian context. The study is useful in giving insights to the stakeholders in their decision making.
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