The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia

In recent decades, there has been a notable and growing practice of real earnings management practiced through accretive share buybacks. Corporate governance is recognised as a significance mechanism in confirming the credibility of financial reporting quality. Overall, this study examines accretive...

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Main Author:	Alquhaif, Abdulsalam Saad Saleh
Format:	Thesis
Language:	eng eng
Published:	2018
Subjects:	HF5601-5689 Accounting
Online Access:	https://etd.uum.edu.my/7728/1/s95287_01.pdf https://etd.uum.edu.my/7728/2/s95287_02.pdf
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id	my-uum-etd.7728
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abdul Latif, Rohaida Chandren, Sitraselvi
topic	HF5601-5689 Accounting
spellingShingle	HF5601-5689 Accounting Alquhaif, Abdulsalam Saad Saleh The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
description	In recent decades, there has been a notable and growing practice of real earnings management practiced through accretive share buybacks. Corporate governance is recognised as a significance mechanism in confirming the credibility of financial reporting quality. Overall, this study examines accretive share buybacks as a mechanism for real earnings management. The objectives of this study are to investigate the influence of corporate governance mechanisms: board of directors (BOD) effectiveness (independence, size, meetings and financial expertise), audit committee (AC) effectiveness (independence, size, meetings and financial expertise), audit quality and ownership structure (family, managerial, foreign) on accretive share buybacks. Considering the stock options hypothesis, this study also investigates the impact of employee stock options (ESOS) on accretive share buybacks. The study utilised 235 firm-year observations of non-financial firms listed on the Bursa Malaysia that were involved in accretive share buybacks over the years 2010 to 2015. By using panel data, the findings of the main analysis indicate that AC effectiveness and family ownership was negatively related to accretive share buybacks, but the effectiveness of the BOD and audit quality was positively associated with accretive share buybacks. The findings also show that ESOS were positively related to the accretive share buybacks, and no relationship was revealed between managerial ownership and foreign ownership with accretive share buybacks. The unexpected result of BOD effectiveness revealed the negative role of concentrated ownership in the monitoring functions of the BOD. This study contributes to a better understanding of corporate governance practices and accretive share buyback activities by Malaysian listed firms. The results indicate that firms should improve the effectiveness of corporate governance mechanisms (BOD, AC, audit quality and ownership structure) to enhance financial reporting quality. Hopefully, this study will provide a reference point for relevant parties to improve the applicable regulations and corporate governance schemes.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Alquhaif, Abdulsalam Saad Saleh
author_facet	Alquhaif, Abdulsalam Saad Saleh
author_sort	Alquhaif, Abdulsalam Saad Saleh
title	The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
title_short	The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
title_full	The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
title_fullStr	The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
title_full_unstemmed	The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia
title_sort	influence of corporate governance mechanisms and employee stock options on accretive share buyback in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
publishDate	2018
url	https://etd.uum.edu.my/7728/1/s95287_01.pdf https://etd.uum.edu.my/7728/2/s95287_02.pdf
_version_	1747828254967857152
spelling	my-uum-etd.77282021-08-09T04:08:48Z The influence of corporate governance mechanisms and employee stock options on accretive share buyback in Malaysia 2018 Alquhaif, Abdulsalam Saad Saleh Abdul Latif, Rohaida Chandren, Sitraselvi Tunku Puteri Intan Safinaz School of Accountancy (TISSA) Tunku Intan Safinaz School of Accountancy (TISSA) HF5601-5689 Accounting In recent decades, there has been a notable and growing practice of real earnings management practiced through accretive share buybacks. Corporate governance is recognised as a significance mechanism in confirming the credibility of financial reporting quality. Overall, this study examines accretive share buybacks as a mechanism for real earnings management. The objectives of this study are to investigate the influence of corporate governance mechanisms: board of directors (BOD) effectiveness (independence, size, meetings and financial expertise), audit committee (AC) effectiveness (independence, size, meetings and financial expertise), audit quality and ownership structure (family, managerial, foreign) on accretive share buybacks. Considering the stock options hypothesis, this study also investigates the impact of employee stock options (ESOS) on accretive share buybacks. The study utilised 235 firm-year observations of non-financial firms listed on the Bursa Malaysia that were involved in accretive share buybacks over the years 2010 to 2015. By using panel data, the findings of the main analysis indicate that AC effectiveness and family ownership was negatively related to accretive share buybacks, but the effectiveness of the BOD and audit quality was positively associated with accretive share buybacks. The findings also show that ESOS were positively related to the accretive share buybacks, and no relationship was revealed between managerial ownership and foreign ownership with accretive share buybacks. The unexpected result of BOD effectiveness revealed the negative role of concentrated ownership in the monitoring functions of the BOD. This study contributes to a better understanding of corporate governance practices and accretive share buyback activities by Malaysian listed firms. The results indicate that firms should improve the effectiveness of corporate governance mechanisms (BOD, AC, audit quality and ownership structure) to enhance financial reporting quality. Hopefully, this study will provide a reference point for relevant parties to improve the applicable regulations and corporate governance schemes. 2018 Thesis https://etd.uum.edu.my/7728/ https://etd.uum.edu.my/7728/1/s95287_01.pdf text eng public https://etd.uum.edu.my/7728/2/s95287_02.pdf text eng public https://sierra.uum.edu.my/record=b1698829~S1 Ph.D. doctoral Universiti Utara Malaysia Abbott, L. J., Parker, S., & Peters, G. F. (2004). Audit committee characteristics and restatements. Auditing: A Journal of Practice & Theory, 33(1), 69–87. Abdul Latif, R. (2010). Actual share buybacks: determinants and price effects. Unpublished Doctoral dissertation, Universiti Utara Malaysia. Abdul Latif, R., Kamardin, H., Taufil Mohd, K., & Adam, N. (2013). Multiple directorships, board characteristics and firm performance in Malaysia. Management, 3(2), 105–111. Abdul Latif, R., & Taufil-Mohd, K. N. (2013). Signaling and substitution hypotheses in Malaysian share sepurchases. 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