Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia

Real earnings management (REM) has attracted much attention recently as an alternative technique of earnings management that may affect company performance. This study examines the effect of governance monitoring and ownership concentration on REM by manufacturing companies listed in the Main Market...

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Main Author:	Ghaleb, Belal Ali Abdulraheem
Format:	Thesis
Language:	eng eng eng eng
Published:	2019
Subjects:	HF5667 Professional Ethics Auditors. HG Finance
Online Access:	https://etd.uum.edu.my/9298/1/s99246_01.pdf https://etd.uum.edu.my/9298/2/s99246_02.pdf https://etd.uum.edu.my/9298/3/s99246_references.docx https://etd.uum.edu.my/9298/5/depositpermission-not%20allow_s99246-Belal%20Ali%20Abdulraheem.pdf
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id	my-uum-etd.9298
record_format	uketd_dc
spelling	my-uum-etd.92982022-04-24T01:08:48Z Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia 2019 Ghaleb, Belal Ali Abdulraheem Kamardin, Hasnah Tunku Puteri Intan Safinaz School of Accountancy (TISSA) Tunku Puteri Intan Safinaz School of Accountancy (TISSA) HF5667 Professional Ethics. Auditors. HG Finance Real earnings management (REM) has attracted much attention recently as an alternative technique of earnings management that may affect company performance. This study examines the effect of governance monitoring and ownership concentration on REM by manufacturing companies listed in the Main Market of Bursa Malaysia, a country that is characterised by high ownership concentration and weak corporate governance. Specific attention is given to the role of investment in governance monitoring. Data are from 1,056 firm-year observations for the period 2013 to 2016, following the revision of code of corporate governance in Malaysia in 2012. Random effects regression was used for testing the hypotheses based on the Breusch and Pagan Lagrange multiplier test and Hausman test results. The result shows a significant negative relationship between non-executive directors’ remuneration, investment in internal audit function, audit fees, the aggregate of governance monitoring costs, and REM practices in Malaysian manufacturing companies. The findings indicate that audit committee size, independence, financial expertise, chair accounting expertise, and audit committee score do not constrain REM. Family ownership concentration is negatively and significantly associated with REM, implying that family shareholders tend to align the majority-minority interests and protect shareholders' wealth. However, managerial and foreign substantial shareholders are not associated with REM, suggesting that different controlling shareholders have different effect on REM. Finally, the study reveals that family ownership concentration does not interact with governance monitoring costs to influence REM. The results are robust under various additional analyses and model estimations, and have implications for policymakers (such as Securities Commission), investors, directors of companies and other market participants in restraining REM practices. 2019 Thesis https://etd.uum.edu.my/9298/ https://etd.uum.edu.my/9298/1/s99246_01.pdf text eng staffonly https://etd.uum.edu.my/9298/2/s99246_02.pdf text eng staffonly https://etd.uum.edu.my/9298/3/s99246_references.docx text eng public https://etd.uum.edu.my/9298/5/depositpermission-not%20allow_s99246-Belal%20Ali%20Abdulraheem.pdf text eng staffonly other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng eng eng
advisor	Kamardin, Hasnah
topic	HF5667 Professional Ethics Auditors. HG Finance
spellingShingle	HF5667 Professional Ethics Auditors. HG Finance Ghaleb, Belal Ali Abdulraheem Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
description	Real earnings management (REM) has attracted much attention recently as an alternative technique of earnings management that may affect company performance. This study examines the effect of governance monitoring and ownership concentration on REM by manufacturing companies listed in the Main Market of Bursa Malaysia, a country that is characterised by high ownership concentration and weak corporate governance. Specific attention is given to the role of investment in governance monitoring. Data are from 1,056 firm-year observations for the period 2013 to 2016, following the revision of code of corporate governance in Malaysia in 2012. Random effects regression was used for testing the hypotheses based on the Breusch and Pagan Lagrange multiplier test and Hausman test results. The result shows a significant negative relationship between non-executive directors’ remuneration, investment in internal audit function, audit fees, the aggregate of governance monitoring costs, and REM practices in Malaysian manufacturing companies. The findings indicate that audit committee size, independence, financial expertise, chair accounting expertise, and audit committee score do not constrain REM. Family ownership concentration is negatively and significantly associated with REM, implying that family shareholders tend to align the majority-minority interests and protect shareholders' wealth. However, managerial and foreign substantial shareholders are not associated with REM, suggesting that different controlling shareholders have different effect on REM. Finally, the study reveals that family ownership concentration does not interact with governance monitoring costs to influence REM. The results are robust under various additional analyses and model estimations, and have implications for policymakers (such as Securities Commission), investors, directors of companies and other market participants in restraining REM practices.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Ghaleb, Belal Ali Abdulraheem
author_facet	Ghaleb, Belal Ali Abdulraheem
author_sort	Ghaleb, Belal Ali Abdulraheem
title	Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
title_short	Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
title_full	Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
title_fullStr	Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
title_full_unstemmed	Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia
title_sort	governance monitoring costs, audit committee quality, ownership concentration and real earnings management in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
publishDate	2019
url	https://etd.uum.edu.my/9298/1/s99246_01.pdf https://etd.uum.edu.my/9298/2/s99246_02.pdf https://etd.uum.edu.my/9298/3/s99246_references.docx https://etd.uum.edu.my/9298/5/depositpermission-not%20allow_s99246-Belal%20Ali%20Abdulraheem.pdf
_version_	1747828566965354496

Governance monitoring costs, audit committee quality, ownership concentration and real earnings management in Malaysia

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