Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia
This paper investigates the effect of the involvement of the board chairman in the audit committee (AC) on earnings management (EM). It examines Bursa Malaysia-listed companies with the lowest positive earnings for the years 2013 to 2015. The Modified Jones Model by Kasznik (1999) was used to determ...
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http://jafeb.org/journal/article.php?code=74181
2020
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Online Access: | http://repo.uum.edu.my/27378/1/JAFEB%207%208%202020%20233%20246.pdf http://repo.uum.edu.my/27378/ http://doi.org/10.13106/jafeb.2020.vol7.no8.233 |
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my.uum.repo.273782020-08-26T13:02:02Z http://repo.uum.edu.my/27378/ Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia Al-Absy, Mujeeb Saif Mohsen Ku Ismail, Ku Nor Izah Chandren, Sitraselvi Al-Dubai, Shehabaddin Abdullah A. HD28 Management. Industrial Management This paper investigates the effect of the involvement of the board chairman in the audit committee (AC) on earnings management (EM). It examines Bursa Malaysia-listed companies with the lowest positive earnings for the years 2013 to 2015. The Modified Jones Model by Kasznik (1999) was used to determine discretionary accruals. An AC that includes its board chairman as an ordinary member is associated with greater discretionary accruals. However, a board chairman who is also the chairman of the AC does not seem to influence discretionary accruals. This paper supports the agency theory and policy-makers’ efforts to prevent board chairmen from sitting on ACs. It is the first study that uses the agency theory to describe the association between the board chairman’s involvement in the both AC and EM. This study alerts policy-makers, stakeholders and researchers to the influence of a board chairman serving on the AC in curbing EM. Furthermore, it provides empirical evidence that the majority of Malaysian companies whose board chairmen are involved in the AC appoint the chairman as an ordinary member of the AC. This indicates that executive directors may affect such actions. Hence, more policies are needed to improve AC independence. http://jafeb.org/journal/article.php?code=74181 2020 Article PeerReviewed application/pdf en http://repo.uum.edu.my/27378/1/JAFEB%207%208%202020%20233%20246.pdf Al-Absy, Mujeeb Saif Mohsen and Ku Ismail, Ku Nor Izah and Chandren, Sitraselvi and Al-Dubai, Shehabaddin Abdullah A. (2020) Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia. The Journal of Asian Finance, Economics and Business, 7 (8). pp. 233-246. ISSN 2288-4637 http://doi.org/10.13106/jafeb.2020.vol7.no8.233 doi:10.13106/jafeb.2020.vol7.no8.233 |
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HD28 Management. Industrial Management Al-Absy, Mujeeb Saif Mohsen Ku Ismail, Ku Nor Izah Chandren, Sitraselvi Al-Dubai, Shehabaddin Abdullah A. Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
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This paper investigates the effect of the involvement of the board chairman in the audit committee (AC) on earnings management (EM). It examines Bursa Malaysia-listed companies with the lowest positive earnings for the years 2013 to 2015. The Modified Jones Model by Kasznik (1999) was used to determine discretionary accruals. An AC that includes its board chairman as an ordinary member is associated with greater discretionary accruals. However, a board chairman who is also the chairman of the AC does not seem to influence discretionary accruals. This paper supports the agency theory and policy-makers’ efforts to prevent board chairmen from sitting on ACs. It is the first study that uses the agency theory to describe the association between the board chairman’s involvement in the both AC and EM. This study alerts policy-makers, stakeholders and researchers to the influence of a board chairman serving on the AC in curbing EM. Furthermore, it provides empirical evidence that the majority of Malaysian companies whose board chairmen are involved in the AC appoint the chairman as an ordinary member of the AC. This indicates that executive directors may affect such actions. Hence, more policies are needed to improve AC independence. |
format |
Article |
author |
Al-Absy, Mujeeb Saif Mohsen Ku Ismail, Ku Nor Izah Chandren, Sitraselvi Al-Dubai, Shehabaddin Abdullah A. |
author_facet |
Al-Absy, Mujeeb Saif Mohsen Ku Ismail, Ku Nor Izah Chandren, Sitraselvi Al-Dubai, Shehabaddin Abdullah A. |
author_sort |
Al-Absy, Mujeeb Saif Mohsen |
title |
Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
title_short |
Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
title_full |
Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
title_fullStr |
Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
title_full_unstemmed |
Involvement of board chairmen in audit committees and earnings management: Evidence from Malaysia |
title_sort |
involvement of board chairmen in audit committees and earnings management: evidence from malaysia |
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http://jafeb.org/journal/article.php?code=74181 |
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2020 |
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http://repo.uum.edu.my/27378/1/JAFEB%207%208%202020%20233%20246.pdf http://repo.uum.edu.my/27378/ http://doi.org/10.13106/jafeb.2020.vol7.no8.233 |
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