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This paper investigates the shareholder wealth impact of government investment in listed companies (and by extension, government subsidisation of those companies), using data from Malaysia. We distinguish two overlapping categories of government-related investors: those whose principal mission relates to economic policy and those whose principal mission relates to social policy. The methodology entails Ordinary Least Squares regressions. There are two dependent variables measuring management success at generating shareholder wealth: an intrinsic value surrogate and return on equity. The final sample comprises 1732 company–year observations from the investigation period 2011–2014. The evidence indicates that companies subject to shareholder by a government-related investor with a social (economic) policy mission are more (less) successful at generating wealth than companies without any government shareholding at all. The findings indicate that for companies subject to ownership by government investors with a mission related to economic policy, government subsidies are wealth-enhancing, subject to diminishing marginal returns beyond a threshold level of government shareholding. The research design reflects adaptations to the Malaysian institutional setting via choice of control variables and usage of data from a leading Malaysian equity analyst.

We investigate the association between dividend policy and government shareholding, using Malaysian data. We hypothesize a positive association. We contribute to the literature about dividend policy. Unique features of our study include adaptations to the Malaysian institutional setting, with respect to usage of dividend relevance theory, research methodology, and data collection. The methodology entails two-stage least squares regressions. Dividend payout and dividend yield are the dependent variables in tests of the research hypothesis. The independent variable of interest measures ownership by government-related institutional investors. The sample comprises 1190 company-years, over the investigation period 2006–2013. The results support our hypothesis. The evidence suggests that this support principally emanates from companies with low-quality corporate governance.

This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporations, Emerging Markets

PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms.Research limitations/implicationsThis research has focused only on family and non-family firms.Practical implicationsAn implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.Originality/valueThis research provides some insights to both academia and industry regarding the consequences of domestic banking relationship and different levels of concentrated ownership in family firms in an emerging market. These insights can help improve the corporate governance as well as ownership structure of Malaysian public-listed family firms which dominate the capital market. Our findings refute the argument by Peng and Jiang (2010) by demonstrating that corporate reputational effects may be a substitute for institutional deficiencies.

Purpose The purpose of this paper is to investigate the factors that influence Malaysian manufacturing sector investment in accounts receivable (AR), an asset seen by many as one of the riskiest in any company’s balance sheet. Design/methodology/approach The authors test several theories, related to AR, using a cross-section of 262 listed manufacturing firms over a period of five years (2007-2011). Both fixed and random effect approaches are adopted to deal with potential heterogeneity across firms. Findings The results show that investment in AR in Malaysia are influenced by firm size, short-term finance, sales growth and collateral. Profit, liquidity and gross margins have no role in affecting the decision of trade credit granting to customers. The results are inconsistent with previous studies. Size and short-term finance have a negative, rather than positive, impact. Liquidity and gross margins have no, rather than positive, effect. While profit and sales growth are predicted to feature a U-shaped relationship with investment in AR, the former is insignificant while the latter is strictly increasing. The only factor found to be consistent with prior studies is collateral. Research limitations/implications The results have two principal implications. First, policy makers should not take a holistic view of the trade credit market. Given that policy makers aim to improve liquidity and trade, they should design policies that are not only country specific but also sector specific. As is clear from our results, what holds for other countries or sectors may not necessarily be true for the Malaysian manufacturing sector. This has important implications for policy makers in emerging economies. Practical implications Investment in AR, in the Malaysian manufacturing sector, is impacted by many of the factors implied by either theory or empirical evidence. However, the main finding in this paper is that the Malaysian manufacturing sector is rather different. First, while liquidity and gross margin have been found to have a positive and significant effect on AR helping hand theory in prior studies, the results show that these two factors play no role in influencing the level of AR in the Malaysian manufacturing sector. Social implications Unlike the experience in developed economies, firms in our sample that have access to short-term finance are less likely to grant trade credit. This suggests that the helping hand theory does not hold as far as the Malaysian manufacturing firms are concerned: firm that have better access to short-term finance in Malaysia do not use trade credit to pass on the benefit to their customers by granting them trade credit. Originality/value It is unclear why firms invest in AR given the high risks of uncollectability as well as tedious, time-consuming and costly legal process for debt recovery compared to firms from more developed economies. This paper examines the reasons business-to-business lending, through AR, is widespread in Malaysia and investigates the factors that affect this decision despite the risk involved. To our knowledge, this is the first study to date that looks at the factors that influence AR level in the Malaysian manufacturing sector.

This paper was conducted to examine whether there was a negative relationship between independent directors’ tenure and firm value which indicated the existence of expropriation due to long tenure of independent directors and whether controlling shareholders’ ownership moderated this relationship among Malaysian firms. The results revealed that there was a negative relationship between independent directors’ tenure and firm value. It also showed there was a significant positive moderating effect of controlling shareholders’ ownership on the relationship among Malaysian family firms in exclusive industries. However, there was inconclusive evidence that this negative relationship and positive moderating effect were stronger amongst the family firms compared with non-family firms.

The Malaysian capital market regulators take great efforts to continuously enhance corporate governance codes and practices to improve transparent reporting and enhance board responsibility and investors’ protection. In 2017, the Malaysian Institute of Corporate Governance published a report assessing the transparency of reporting by top 100 listed companies in respect of anti-corruption, organizational disclosure, and sustainability. This study uses this unique set of data on scores on anti-corruption commitment, organizational transparency, and sustainability to investigate the association between corporate transparency and firm value, and whether political connections moderate this relationship. Not surprisingly, findings show that listed government-linked companies (GLCs) have higher scores than non-GLCs, such as family and foreign firms. Firms with enhanced anti-corruption commitment are more likely to have higher firm value, and this relationship is stronger for politically connected firms. The implications for investors and regulators are discussed in this paper.

The Malaysian corporate environment has been shocked by corporate scandals and poor performance among government-related companies, such as 1Malaysia Development Berhad (1MDB), Lembaga Tabung Haji (LTH), Felda Global Ventures (FGV) and Khazanah Nasional Berhad (KHAZANAH). Despite having strong corporate governance and being strengthened through Malaysia Code of Corporate Governance (MCCG), unethical practices and a lack of transparency remain a problem among Malaysian companies. The purpose of this paper is to examine the level of disclosure of ethical practices among Malaysian public listed companies. Ethical practice disclosure is measured using the modified Ethical Commitment Index (ECI) with six themes derived from the literature; notably, corporate ethical values, action to promote ethics, whistle-blowing policy, code of ethics, sustainability practices, and ethics committee. Through content analysis of the annual reports of 1,115 companies and five years’ observation (2012-2016), this study found there is a need to improve several aspects of ethical practice disclosure. The findings implied that companies supported the MCCG, with most of the companies complying with the recommendations of MCCG 2012 to uphold a high standard of ethical practice. However, supplementary practices, such as disciplinary action, programmes to support a code of ethics, whistle-blowers’ protection, and establishing an ethics committee, are still weak. The findings indicate that the level of ethical practice disclosure among Malaysian public listed companies remains low and raises concern that requires action by regulators. This paper contributes by providing insights into the disclosure of ethical practice among Malaysian public companies.

This research is conducted in the Malaysian corporate setting with the presence of favoured companies or politically connected companies (PCON). PCON companies are perceived by the market and external auditors to be riskier than non-politically connected companies. In addition, these companies generally exhibit poor corporate governance practices and face agency problems. However, the enforcement of tighter regulations and the greater emphasis on risk management and governance practices within the PCON companies further indicate the growing importance of having a strong audit committee and internal audit functions in fulfilling corporate governance responsibilities. With reference to the findings from the interviews with the regulators, external auditors and internal auditors, the audit committee and the head of internal auditors of PCON companies have been complying with the Bursa Malaysia Listing Requirements, which were revised in 2008. This observation strengthens claims that the corporate governance regulatory framework has indeed been effective. The involvement of the audit committee and internal audit functions in strengthening internal controls demand higher audit quality from the external auditors, and, hence, higher audit fees. Keywords: Audit Committee, Audit Fee, Corporate Governance, Internal Audit Function, Politically Connected Companies JEL Classification: M41, M42, M48

We examine the relationship between related party transactions (RPTs) and firm value and how this relationship is moderated by ownership concentration using a sample of 379 listed family and 151 non-family firms for the period 2007 to 2009. Ordinary Least Square Pooled Model as well as Fixed Effects Model panel data regressions are used in the data analysis. For family firms, we find that RPTs reduce firm value (proxied by Tobin’s Q and market-to-book value). Further, controlling shareholders’ ownership has a significant positive moderating effect on this relationship. However, for non-family firms, there is no significant evidence of firm value reduction and positive moderating effect respectively. We conclude that expropriation via RPTs is stronger in family firms compared to non-family firms. Additionally, an increase in controlling shareholders’ ownership helps mitigate this expropriation and this mitigating effect is stronger in family firms compared to non-family firms. The implications for the capital market regulator are discussed in this paper.

In their efforts to assist accountability for small and medium-sized enterprises globally, the International Accounting Standards Board issued the Exposure Draft: International Financial Reporting Standards for Small and Medium sized Enterprises (IFRS for SMEs) in 2007. Three countries from the Association of South East Asian Nations (ASEAN) are amongst the 66 jurisdictions to state they would adopt the IFRS for SMEs. This paper critically examines the forces driving adoption, participation of stakeholders in the processes of development of the IFRS for SMEs, implementation issues and possible dysfunctional consequences for entrepreneurs in developing countries. We question the suitability of the IFRS for SMEs for adoption, particularly by the developing economies within ASEAN. We find the one-size-fits-all-standard for SMEs, with a capital markets orientation, does not accommodate well the differing cultures, ways of doing business, regulatory frameworks, underlying philosophies, or needs of users of financial reports from SMEs. We conclude that adoption without modifications or exemptions would provide few benefits for SMEs in emerging economies; rather it would be burdensome to entrepreneurs and inappropriate for achieving national economic growth targets. Imposition of the IFRS for SMEs may inadvertently result in reduced entrepreneurship activity in response to onerous financial reporting requirements. We suggest that investment in the business infrastructure is a priority. Further, in-depth research should be undertaken, in each jurisdiction before adoption of the IFRS for SMEs, on the challenges that are likely to be faced in implementing the standard. Our paper contributes to the discussion on the adoption and implementation of the internationalization of accounting standards.

With increasing attention being paid to corporate sustainability, pressure from stakeholders, especially customers, is forcing companies to implement sustainability strategies and practices that express their commitment to sustainable development, and engage with stakeholders through voluntary sustainability disclosure. To better understand the sustainability disclosure mechanisms from a business strategy perspective, this study investigates the influence of business strategy, formulated by customer groups, on online sustainability disclosure. It provides empirical observation of Malaysian public-listed companies based on the combined lens of stakeholder and legitimacy theory. Despite the comparatively low level of corporate sustainability disclosure in Malaysia, this content analysis of online sustainability information disclosure reveals that the companies with more diversified product lines disclose more sustainability information, and that the corporate sustainability effort is significantly related to brand name. Hence, companies should be encouraged to proactively improve their sustainability performance and disclose more sustainability information in order to strengthen their brand names. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

PurposeThe purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange Commission requires firms to identify their audit committee financial experts.Design/methodology/approachBased on two theories, the resource dependence theory and agency theory, the study examines the association of audit committee experts with financial reporting quality, proxied by earnings management. Samples involved 2008 financial data of 300 firms that were ranked by highest market capitalisation. In total, four types of expertise are developed based on academic qualification, professional qualification and work experience.FindingsPresence of non‐accounting experts and accounting experts is significant to reduce the magnitude of earnings management. Other than that, leverage and firms size are also found to be significant.Originality/valueThe findings show RDT is prevalent in accounting or auditing domain, where there is evidence showing directors bridge firms with external resources such as expertise and experience. Subsequently, contribute to the mainstream accounting literature that the resource dependence theory is also vital in explaining situations where directors' expertise and knowledge are involved.

Increased business complexities coupled with enhanced global transformation have propelled corporations to behave as responsible citizens to drive the sustainability agenda. Many corporations incorporate their affirmative commitment to sustainable business practices into their corporate identities and give evidence for this in their sustainability reports. This paper examines the role of the board of directors in sustainability reporting quality (SRQ) in the Asia-Pacific region. Based on a cross-sectional study of 113 companies from 12 countries in the region, we find that the SRQ in the region leaves much room for improvement. However, we find that the institutionalization of the concept of corporate social responsibility (CSR) in an organization provides a sound foundation for enhancing SRQ. We find that the value of CSR anchored in the vision and/ or mission statement and strategic alliances fostered with non-governmental organizations are positively associated with SRQ. This study contributes to strengthening the understanding, promoting discussion on the state of sustainability reporting in the Asia-Pacific context and laying a solid foundation for more aggressive efforts to enhance SRQ. The study identifies the significant drivers currently associated with SRQ. The weak role of the board of directors in upholding the sustainable development agenda through the reporting process is highlighted. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.

This study examines the relationship between institutional ownership in Malaysia and the quality of reported earnings. Given the typically significant stake and unique position of influence, participation from active institutional investors is said to provide an effective monitoring role in the companies in which they invested. Using the accrual quality model to measure earnings quality, this study provides evidence that concentrated shareholdings, in the hands of institutional investors, afford greater incentives to closely monitor firms’ activities. The results confirm the active monitoring hypothesis, which suggests that institutional investors are likely to actively monitor their investments due to the large amount of wealth they invested. Furthermore, the government's commitment to the establishment of the Minority Shareholder Watchdog Group (MSWG) to encourage shareholder activism appears to have a positive effect on the financial reporting quality in Malaysia.

Small and medium-sized enterprises (SMEs) are playing an increasingly important role in the process of industrialization in the developing world. To support SMEs, many developed countries, such as Australia, New Zealand and the United Kingdom, have implemented an audit exemption regime for SMEs, while, in Malaysia, the policy makers and regulators have announced that the audit for SMEs will remain a legal obligation that they will revisit sometime in the future. Thus, this paper aims to shed light on this issue by exploring the relationship between the ownership structure of SMEs and audit exemption. The objective is to determine whether SMEs will still opt for an audit if it becomes voluntary, and, if they do, what would be the reason for the sampled SMEs to behave in such a manner? This research is exploratory in nature and employs the questionnaire survey method to collect data from a random sample of 200 SMEs in both the manufacturing and service industries. The survey results indicate that there is a significant difference between the ownership structure of firms and the decision of SMEs to opt for voluntary audit. Moreover, the lack of resources is significantly related to opting for a voluntary audit. Therefore, based on the resource-based theory, SMEs in Malaysia mainly opt for auditing, not to fulfil a mandatory obligation but to compensate for their lack of tangible (professional/qualified accountants) and/or intangible (accounting and business expertise) resources. This study provides new insights into the way Malaysian SMEs view auditing. It highlights the implications of the policy directives of the Malaysian regulators and the accounting fraternity. Furthermore, the Malaysian experience is useful for consideration by other developing nations that are contemplating moving towards an audit exemption regime.

This paper examines whether late payment (LP) by customers impacts firms' profitability, using a cross-sectional sample of 287 Malaysian public-listed manufacturing firms for the financial year 2007. This is an important issue given that trade credit is commonly seen as a significant short-term financing practice in Asia. However, in Malaysia, trade credit has not been explored, largely due to the unavailability of relevant published data and the reluctance of firms to divulge information regarding their trade credit practices. To overcome this, we suggest a new measure of LP using the Pareto 80:20 rule to take cognisance of local nuances and industry practice, and argue that Pareto Days Overdue is an appropriate measure of LP for Malaysia. We find that 60% of the sampled firms experience LP and LP has a significant inverse effect on their profitability; and those with shorter credit terms and Days Sales Outstanding (DSO) perform better than those with longer credit terms and longer DSO. The paper also discusses implications for policy makers and regulators since the accounting rules related to the disclosure of receivables in Malaysia are converging towards the International Financial Reporting Standards (IFRS).

Purpose – This paper introduces the special issue on accounting in Asia. It summarises and reflects on themes and findings emerging from the papers in this volume. Design/Methodology/Approach – The findings reported in the paper are based on desk research and review of the papers contained in the volume. Findings – The papers evidence that corporate governance and financial reporting quality are interlinked. Accounting in Asia is preoccupied with the corporate governance–financial reporting quality nexus in the face of convergence with International Financial Reporting Standards (IFRS). Research limitations/Implications – Policy makers in Asian countries need to develop appropriate regulatory mechanisms to address cultural issues, namely, attitudes towards secrecy and fraud, to ensure effective implementation of IFRS. This entails sound grounding in ethics and integrity within the financial reporting stakeholder community. Additionally, unintended consequences of fair value application need to be examined in the Asian context. Originality/Value of paper – This paper is a summary of seven studies in Asia. The studies highlight critical issues emerging from Asia's experience with corporate governance reforms and the move to IFRS convergence, and set the agenda for future research in accounting in Asia, specifically, and emerging economies, generally.

Business organisations employ a range of communication channels to inform and interact with their stakeholders on their corporate social responsibility and sustainability concerns. Over the years, with the proliferation of the internet, online and web-based communications have become the most widely used medium. However, comparatively little is known about the current use of and potential of internet communications in corporate sustainability disclosure in Malaysia. This study explores and aims to highlights the numerous advantages that the web provides for communication of sustainability issues. These advantages have been conceptualised through Media Richness Theory and operationalised through a study of online sustainability disclosure practices among public-listed companies in Malaysia. The findings indicate that the potential of the web is not extensively utilised by businesses to communicate their sustainability practices.

PurposeThis paper seeks to investigate the influence of government and foreign affiliates, particularly; multinational companies on corporate social reporting (CSR) development in an economy, where CSR awareness is low coupled with weak pressure group activism.Design/methodology/approachThis is a cross sectional study that focuses on the information contained in the annual reports for year 2002/2003. This research uses content analysis as method to measure the extent CSR.FindingsBased on regression analysis, the study evidences on the impact of government influence. However, the impact of foreign affiliation variables is not evident. Institutionalisation of the government's aspirations and commitment to CSR is perhaps the most appropriate description for Malaysian CSR practice.Research limitations/implicationsThere are two main limitations of this study. Firstly, this study examines the annual reports for one year. Secondly, this study is annual reports centric. It does not examine any other stand alone reports that the respondents might have produced on the subject of society and the environment.Practical implicationsThis study provides justification for government's role in promoting CSR practice. The impact is evidenced although there are no direct concerted efforts at that time by the government in respect of CSR policy implementation. The significant role is attributed to the unique Malaysian socio economic structure.Originality/valueThis study contributes to the CSR literature particularly in the context of economies where governments play a significant role in promoting economic development. It provides empirical evidence of the influence of government and foreign affiliates. It also adds to the literature by explaining the phenomenon from the Institutional perspective and its relevance to a developing economy.

This paper examines whether independent directors’ tenure moderates the relationship between related party transactions and firm value and whether controlling shareholders’ ownership moderates this moderating effect in Malaysian firms. The results show that independent directors’ tenure negatively moderates the relationship between related party transactions and firm value. However, controlling shareholders’ ownership positively moderates this moderating effect. It is also found that the negative moderating effect of independent directors’ tenure and the positive moderating effect of controlling shareholders’ ownership are stronger in family firms compared to non-family firms. The research results are robust against the control of technology companies.

The role of small and medium enterprises (SMEs) is recognized globally given their contribution to total productivity and job opportunities. However, the majority of SMEs tend to fail due to a lack of marketing knowledge and managerial skills or technical expertise. Professional accountants are in a unique situation to help SME owner/managers to achieve their business objectives and bridge the skills gap. Therefore, this paper aims to identify the factors that affect the decisions of owner/managers of SMEs in Iranian manufacturing sector to utilise the professional accountants’ advisory services and to examine the impact of these advisory services on SME performance using the Resource-Based View (RBV) of the firm. Based on a questionnaire survey data of 658 Iranian manufacturing SMEs, our regression analysis reveals a significant positive relationship between utilisation of professional accountants′ advisory services and three independent variables, namely, knowledge of owner/manager, competitive intensity and complexity of marketing decisions. Furthermore, we evidence that the use of advisory services is significant and positively associated with SME performance. More importantly, utilisation of professional accountants′ advisory services partially mediates the relationship between knowledge of owner/manager, competitive intensity and complexity of marketing decisions and firm performance. Therefore, we provide a specific, theoretically and empirically grounded prediction of how utilisation of professional accountants′ advisory services influences performance with implications for theory and practice.

This paper aims to identify the factors that affect the decisions of managers of manufacturing sector SMEs in Iran to utilise external accountants’ advisory services and to examine the effect of these advisory services on SME performance using the Resource-Based View (RBV) of the firm as the theoretical lens in the Iranian SME manufacturing sector. A questionnaire survey of 658 Iranian manufacturing SMEs is used. The results of linear

The aim of this study is to examine the factors that influence on outsourcing of accounting functions and the effect of outsourcing on firm performance in Iranian manufacturing small and medium enterprises (SMEs). Results from a survey of 658 SMEs show that outsourcing is positively associated with owner/manager knowledge and the technical competence, but was not found a positive relationship between outsourcing and the size of the firm. It was found that outsourcing has a positive impact on SME performance. In addition, our analysis suggested that outsourcing did not mediate the influence of firm size on SME performance but partially mediated the impact of owner/manager knowledge on firm performance and also technical competence of an accountant on SME performance.

This study aims to identify the factors affect Iranian SME decision to outsource accounting functions in term of transaction cost economics (TCE) and resource- based view (RBV) perspectives in manufacturing sector. Data collected by using a 658 questionnaire survey with SME owner/ managers. Our multiple linear regression analysis shows that higher asset specificity was associated with lower levels of outsourcing of accounting functions. In addition, outsourcing intensity is positively and significantly related to trust in external accountant, degree of competition, and corporate strategy. Besides, when we included control variables such as firm size and firm age, education and experience in our regression equation, the association between outsourcing intensity and four independent variables was remained statistically significant.

"This thematic volume covers issues such as Executive compensation and corporate governance with special reference to Bangladesh; leading companies in India; Fraudulent Financial Reporting; Non-financial performance measures and performance relationship in the Bangladeshi manufacturing firms; Fair value accounting usefulness and implementation Obstacles; Funding organisations: the conflict between the creative versus scientific approach of allocating funds in New Zealand; and more.

Recent episodes of corporate scandals have resulted in higher levels of regulatory oversights and calls for enhanced corporate governance (CG) and audit quality. These measures impact audit fees which are intrinsically linked to CG. Whilst prior research examines the relationship between internal governance mechanisms and audit fees, the impact of regulatory oversight has not been examined. Hence, the primary objective of this study is to examine the moderating effect of regulatory oversight on the relationship between audit committee (AC) characteristics, internal audit (IA) function attributes and external audit fees in an emerging market, namely Malaysia. The Bursa Malaysia revised its Listing Requirements (BMLR) in 2008, requiring increased interaction between the AC and IA function. Prior thereto, Bank Negara Malaysia, had exercised oversight functions over financial institutions and insurance companies. They were and continue to be highly regulated. This study focuses on the pre- and post-revised BMLR, and also differentiates between highly regulated and less regulated industries. The contributions from this proposed study are threefold. Firstly, we expect the results to provide empirical evidence of the impact of the revised BMLR on audit to feedback to regulators of the efficacy of their CG policy initiatives. Secondly, this study will evidence the moderating role of such regulatory oversights on CG practices. Thirdly, given that prior studies show mixed results regarding the relationship between IA function and external auditing, whether substitutes or complementary, taking account of the regulatory environment may explain the mixed findings thus far. A methodological triangulation approach, involving qualitative and quantitative methods of data collection, through interviews with selected audit practitioners and data from firms’ annual reports, is used. The theoretical model to test the hypotheses is built upon the Simunic (1980)’s model further modified by Griffin and Lont (2007), incorporating the local nuances in the emerging economy context. Supervisors: Assoc. Prof. Dr. Susela Devi, Dr.Chan Wai Meng, Faculty of Business Administration and Accountancy, University of Malaya, Malaysia.

Purpose – The relationship between the board characteristics (i.e. board independence, CEO duality, board size, board meeting and board tenure) and the ownership structure (i.e. managerial ownership, family ownership and institutional ownership) and earnings quality is examined. Design/methodology/approach – Data from 280 non-financial companies listed on Bursa Malaysia's Main Board for the year 2004 is used. Findings – Significant association was found between board tenure and earnings quality. In addition, a positive significant association was found between outside board ownership and family ownership and earnings quality. However no significant relationship was found between board of directors’ independence and earnings quality. Research limitations/implications – The association between audit committees’ characteristics and earnings quality was not examined. An examination of the impact of ownership structure on boards of directors and audit committees is warranted. An investigation of the impact of the ownership structure on earnings quality in Malaysia using separate test on family-controlled and non-family-controlled firms is suggested. Practical implications – The appropriateness of policy directives requiring majority independent directors may be considered by policy makers. Originality/value – The conflict of interest between outside shareholders and managers in a diffused ownership support the agency theory. However, utility of agency theory to explain the conflicts between the controlling owners and the minority shareholders where ownership concentration is prevalent is limited. Whilst demonstrating the dominant impact of ownership structure on earnings quality in Malaysia the study calls for alternative explanations of corporate governance practices in different institutional settings.

An increasing trend is observed among Malaysian corporations in disclosing social and environmental information (ACCA, 2002). However, it is unclear as to why Malaysian companies produce Corporate Social Reports voluntarily. Extant literature reveals a gap in identifying an appropriate theory to adequately explain CSR. This study investigates the applicability of Institutional Theory to enable an understanding of the Malaysian CSR phenomenon. Interviews with senior management of ten Malaysian companies practicing CSR provide grounded qualititative data to determine motivations that influence CSR. This exploratory study provides evidence that Institutional Theory demonstrates a feasible explanation of CSR practice in Malaysia.