Audit Committee Characteristics, Board Diversity, and Fraudulent Financial Reporting in Malaysia

Abstract

We investigate the relationship between audit committee characteristics, board diversity, and the propensity of committing fraud among Malaysian firms. Based on a matched-pair sample of 64 observations for the years 2002-2014, we find limited evidence to suggest that audit committee characteristics matters. However, we find a negative relationship between the percentage of female directors and the likelihood of fraud. Results highlight the importance of the audit committee (in) effectiveness and the relative importance of female directors in Malaysia. Our results are robust when we consider a structural change in corporate governance policies in Malaysia.

CFO attributes and accounting conservatism: evidence from Malaysia

“…Similarly, Ho et al (2015) find that the firm's financial reporting is significantly conservative when the CEOs are female. In Malaysia, Marzuki et al (2019) find that female directors are unlikely to be involved in financial frauds whilst Abdullah and Ismail (2016) reveal that women in audit committee are less likely to manage earnings. Therefore, as CFOs are the ones who have direct responsibility in financial statements and female CFOs are more risk-sensitive, more conservative and less aggressive, we predict that: H1.…”

The Effect of Corporate Social Responsibility and Board Gender Diversity on Bankruptcy: Evidence from Korea

“…This study provides empirical evidence that the representation of female director as board gender diversity expects to lower the level of bankruptcy under the business environment where men have authority and power over women. Though most of the business environments of emerging countries are strong male dominance, a few research have been studied on the role of female director (Al-Fadli et al, 2019;Khaw & Liao, 2018;Marzuki et al, 2019). Therefore, our findings contribute to a good example when female plays a role in defending bankruptcy and is expected to recommend implications that Korean policymakers or regulators need to reform corporate governance practices reflecting board gender diversity.…”

“…Ward and Forker (2017) argue that the presence of female on the board brings better investment opportunities for the firm because female has difference experiences and perspectives compared with men. As an emerging country study, a female director on the board plays an important risk monitoring role, thus reducing fraudulent financial reporting (Marzuki et al, 2019) and firm's risk-taking behaviour (Khaw & Liao, 2018) for Malaysian listed firms. Jia (2019) also finds a female director on the risk management committee decrease the probability of financial distress risk because female is better at monitoring and reducing firm's excessive risk-taking behaviour using Australian firms' data.…”

Corporate governance and financial fraud occurrence – case study on Romanian companies

“…Evaluating the equilibrium between executive and non-executive directors can, to some extent, guarantee the “integrity and accountability” of the business (Pass, 2004; Achim et al ., 2016). Numerous studies in the literature have examined these aspects, demonstrating that non-executive members have an impact on the occurrence of financial fraud (Girau et al ., 2021; Marzuki et al ., 2019; Ibadin and Aimienrovbiye, 2019). The autonomy of board members stands as a crucial factor in ensuring board effectiveness.…”