Ethnicity and accounting conservatism: Malaysian evidence

Abstract

Purpose - The purpose of this paper is to empirically test the association between two ethnic groups: Bumiputera directors and Chinese directors, on the incidence of accounting conservatism. Design/methodology/approach - A panel data analysis of financial statement data was conducted for 300 Malaysian listed firms between 2001 and 2007. Findings - The analysis shows that the ethnic groups influence the adoption of conservatism, but that the evidence is mixed, implying that there could be factors other than ethnicity which explained the directors\u27 behaviour. Practical implications - The results provide a useful input to the proponents of harmonisation in financial reporting, in that Malaysian financial reports do not appear to be influenced by the ethnicity of participating groups. Originality/value - This is the first paper to measure empirically the impact of ethnicity on the incidence of accounting conservatism

Corporate Governance, Institutional Characteristics, and Director Networks in Malaysia

“…Consistent with prior studies, the presence of Bumiputera or politically-connected directors in a company in Malaysia has been one of the major elements since the establishment of the Malaysian capital market (Fung, Gul, & Radhakrishnan, 2015;Yatim, Kent, & Clarkson, 2006;Yunos, Ismail, & Smith, 2012). The presence of Bumiputera or politically-connected directors would increase both a company's direct and indirect connections.…”

“…Additionally, Bumiputera are generally characterised as team players that uphold Islamic values and beliefs, thus manifesting their ability to enhance company performance (Jamaludin & Abdul Wahab, 2016;Yunos et al, 2012). Finally, this study has documented a significant positive association between firm size and all network centrality measures.…”

Board Diversity and Accounting Conservatism: Evidence from Jordan

“…Numerous previous research have emphasized that conservatism mitigates agency conflicts as it reduces overpayment of reward to managers as well as limits managers' opportunistic behavior (Yunos et al, 2012;Boussaid et al, 2015;Garcí a-Sá nchez et al, 2017) and minimizes information asymmetry among managers and outside shareholders (Ho et al, 2015). Moreover, practices of conservatism prevents managers from choosing negative net present value (NPV) projects since it immediately recognizes expected losses (Bushman et al, 2011;Ho et al, 2015).…”

Earnings and Balance Sheet Conservatism in Malaysia: The Effect of Malaysia's Convergence to International Financial Reporting Standards (IFRS)

“…Evidence on conservatism (either earnings or balance sheet) is limited in Malaysia. Mohamed Yunos, Ismail and Smith (2012) provide some evidence on the relationship of various ethnic groups and earnings conservatism and found mixed evidence. The use of a single type of conservatism (i.e.…”