Real earnings management practice in family group affiliated companies
Financial reporting quality of publicly owned companies still remains a serious issue in most countries including Malaysia. Real earnings management (REM) is now becoming a topic of concern in the corporate sector due to the increasing incidence of fraud and accounting manipulations. However, to...
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| Main Authors: | , |
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| Format: | Conference or Workshop Item |
| Language: | English |
| Published: |
2018
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| Subjects: | |
| Online Access: | http://eprints.unisza.edu.my/1427/1/FH03-FESP-18-22505.pdf http://eprints.unisza.edu.my/1427/ |
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| Summary: | Financial reporting quality of publicly owned companies still remains a serious
issue in most countries including Malaysia. Real earnings management (REM) is now
becoming a topic of concern in the corporate sector due to the increasing incidence of fraud
and accounting manipulations. However, to date, research on managing real earnings through
business group affiliation is still scarce and largely unexplored especially in developing
countries. Previous studies suggest that family group affiliation contribute to the earnings
manipulation. This is a major concern in Malaysia since more than fifty per cent of its publicly
own companies are dominated by family group businesses. This unique characteristic and the
limited research on REM provide the main justifications for this study. This article provides a
review of the literature on REM and highlights on the size and complex nature of familyaffiliated business groups in Malaysia. A model to examine the relationships between family
group affiliation and REM is then proposed to bridge the gap in earnings management
research. The study will cover a ten-year period (2006 until 2015) which coincides with
different economic conditions in Malaysia (i.e., economic boom, recession, recovery and
stabilization). These different environments may affect REM practices differently and the
findings are expected to provide new insight on REM behaviour of family affiliated companies
in different market conditions. Furthermore, the results may contribute to strengthening the
existing regulations and provide guidance on preventive strategies and controlling mechanism
in the capital market. |
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