Diversity of Internal Governance and Financial Reporting Quality: Post-GFC of an Emerging Market
Anuar Sarun1, Nooraisah Katmon2, Anis Suriati Ahmad3, Zam Zuriyati Mohamed4
1Anuar Sarun, Faculty of Management and Economics, Universiti Pendidikan Sultan Idris UPSI.
2Nooraisah Katmon, Faculty of Management and Economics, Universiti Pendidikan Sultan Idris UPSI.
3Anis Suriati Ahmad, Faculty of Management and Economics, Universiti Pendidikan Sultan Idris UPSI.
3Zam Zuriyati Mohamed, Faculty of Business and Finance, Universiti Tunku Abdul Rahman UPSI.
Manuscript received on 28 June 2019 | Revised Manuscript received on 16 July 2019 | Manuscript Published on 26 July 2019 | PP: 399-410 | Volume-8 Issue-2S2 July 2019 | Retrieval Number: B10650782S219/2019©BEIESP | DOI: 10.35940/ijrte.B1065.0782S219
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: We examine whether wide-ranging board diversity reduce earnings management from the emerging market of Malaysia. We contribute to the prior literature in several ways. First, while previous literature are mainly focusing on the developing economy, our study is the first that examine the relationship between all-inclusive set of diverse board characteristics and earnings management from the emerging economy. Second, we concentrate to the post-GFC period, where we intentionally avoid the GFC, a situation where managerial opportunistic behaviour to engage in earnings management is more prevalent due to economic reason. Third, we cover the potential complementary or substitutive effects of board diversity characteristics on earnings management. Using 1400 listed firms in emerging market of Malaysia over the period of 2009-2015, in contrast to our prediction, our findings demonstrated that the relationship between board diversity characteristics and earnings management in the Malaysia is mixed. We therefore conclude that the diversity mechanism that work well in the developing countries might not necessarily compatible to the emerging economy such as Malaysia.
Keywords: Board Diversity, Corporate Internal Governance, Financial Reporting Quality.
Scope of the Article: Marketing and Social Sciences