Factors Associated with Financial Restatements: Evidence from Malaysia

Hasnan, Suhaily; Hussain, Alfiatul Rohmah Mohamed

doi:10.17576/pengurusan-2015-44-10

Cited by 14 publications

(32 citation statements)

References 49 publications

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“…According to Hasnan and Hussain (2015), a list of the restated companies is not available from Bursa Malaysia. Malaysian companies are not required to make an immediate announcement once they realize that prior financial statements have to be restated, unlike other significant events, such as issuance of modified audit opinion, loan default, financial…”

Section: Data and Samplementioning

confidence: 99%

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Qasem

Aripin

Wan‐Hussin

2020

IJMF

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PurposeThe purpose of this paper is to examine the influence of financial restatements on the sell-side analysts' stock recommendations.Design/methodology/approachThe sample of this study is based on a dataset from a panel of 246 Malaysian public listed companies for the period 2008 to 2013 (651 company-year observations). This study employs feasible generalized least squares regression.FindingsThis study finds a negative and significant relationship between restated companies and sell-side analysts' stock recommendations, which means that sell-side analysts issue less favorable stock recommendations for restated companies.Practical implicationsThe findings based on observations from an emerging economy complement the results of the US studies that analysts revise their earnings forecasts or recommendations downwards or drop coverage following financial restatements. The results of this study should be useful to capital market participants in understanding how analysts perceive and evaluate restated companies.Originality/valueThis paper expands the literature on financial restatements consequences in an emerging market which is largely unstudied. Prior research on analyst behavior towards restatements has focused on the consequences of restatements in terms of analyst following and forecast accuracy and dispersion. This study examines if and how the restatements affect the analysts' final output as reflected in the recommendation opinion, an area that has so far received little attention.

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Section: Data and Samplementioning

confidence: 99%

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Qasem

Aripin

Wan‐Hussin

2020

IJMF

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“…Capital control from family dominance and political connections in Malaysia's economy has led to an increase in cronyism (Johnson & Mitton, 2003) and thus are expected to influence FFR. Hasnan and Hussain (2015) quoted that corporate ownership in East Asian countries is concentrated in large controlling shareholders, specifically, the family and the individual. Krishnan and Peytcheva (2019) find that auditors assess the risk of fraud as higher for family firms as compared to non-family firms.…”

Section: Independent and Control Variablesmentioning

confidence: 99%

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

Marzuki

Haji-Abdullah

Othman

et al. 2019

AAMJ

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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.

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“…Furthermore, if the regulators are unable to provide evidence of fraud from the material misstatements, the implicated firms would only be required to restate their financial reports. A plethora of studies suggests that the announcement of accounting misstatement might adversely affect the firm's market valuation, especially when it involves income-decreasing earnings management (Hasnan, & Hussain 2015;Dechow et al, 2011;Rotenstein, 2011). Nonetheless, accounting misstatement or restatement does not affect the firm's operation nor listing status (Dechow et al, 2011;Rotenstein, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

The Relationship Between Audit Committee, Political Influence and Financial Reporting Quality: Malaysian Evidence

Ghazali

Shafie

2019

MAR

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This paper examines the relationship between audit committee, political influence and financial reporting quality of Malaysian listed companies. This study uses pool data consisting of 3,255 firm-year observations listed on the Main Board of Bursa Malaysia from year 2010 to 2014. The findings are robust after controlling for the endogeneity. The current findings indicates that audit committee’s independence and the frequency of audit committee meetings are effective in controlling for both real earnings management and accounting misstatements. Nonetheless, in terms of audit committee size and audit committee’ audit expertise, the relationships are still insignificant. It is important to note that there is some improvement after the corporate governance reforms since studies prior to the reforms found audit committee’s variables are ineffective towards a higher quality of financial reporting. Meanwhile, political influence is still relevant in a Malaysian business environment with regard to financial reporting quality, however, the aggressiveness of the influence may have been diluted by the improvement of recent corporate governance reform.

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Factors Associated with Financial Restatements: Evidence from Malaysia

Cited by 14 publications

References 49 publications

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

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

The Relationship Between Audit Committee, Political Influence and Financial Reporting Quality: Malaysian Evidence

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