2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia
| Format: | General Document |
|---|
| _version_ | 1860798182242385920 |
|---|---|
| building | INTELEK Repository |
| collection | Online Access |
| collectionurl | https://intelek.unisza.edu.my/intelek/pages/search.php?search=!collection3 |
| copyright | Copyright©PWB2025 |
| country | Malaysia |
| date | 2022-10-20 |
| format | General Document |
| id | 16321 |
| institution | UniSZA |
| originalfilename | 16321_83fb68cfe8e328a.pdf |
| person | Sharifah Nur Fazeuraida Tuan Mat Rosli |
| recordtype | oai_dc |
| resourceurl | https://intelek.unisza.edu.my/intelek/pages/view.php?ref=16321 |
| sourcemedia | Server storage Scanned document |
| spelling | 16321 https://intelek.unisza.edu.my/intelek/pages/view.php?ref=16321 https://intelek.unisza.edu.my/intelek/pages/search.php?search=!collection3 General Document Malaysia Library Staff (Top Management) Library Staff (Management) Library Staff (Support) Terengganu Faculty of Business and Management English application/pdf 1.5 Server storage Scanned document Universiti Sultan Zainal Abidin UniSZA Private Access Universiti Sultan Zainal Abidin SAMBox 2.3.4; modified using iTextSharp™ 5.5.10 ©2000-2016 iText Group NV (AGPL-version) 169 Ownership structure Copyright©PWB2025 Corporate governance Earnings quality 2022-10-20 16321_83fb68cfe8e328a.pdf Sharifah Nur Fazeuraida Tuan Mat Rosli Opportunistic Behaviour Ownership Control Mechanisms Earnings Quality Of Post Initial Public Offerings Firms Opportunistic behavior (Economics) Control mechanisms (Management) 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia The quality of an earnings report, which depends on the information indicative of financial performance, succumbs to the opportunistic behaviour of managers, who manipulate profits and free cash flow to mislead investors. A change from private to public firm status inevitably forces management to report earnings of higher quality. Earnings management post-Initial Public Offerings (IPO) is an important reason investors pay unrealistic prices for their shares. Hence, firm ownership control is expected to constrain earnings management, by limiting managerial discretion, thereby reporting more earnest earnings to investors. Specifically, the study examines the direct effect of opportunistic behaviour measured by profitability and free cash flow, and ownership control mechanisms of the largest and five largest ownerships’ earnings quality for Malaysian post-IPO firms. Furthermore, the study investigates the interaction effect of ownership control mechanisms on the relationship between opportunistic behaviour and earnings quality. This study engaged 300 Malaysian Shariah and non-Shariah compliant post-IPO firms, listed on Bursa Malaysia between 2007 and 2018 (12 years). The data used was secondary financial data extracted from the firm’s financial statements and Bursa Malaysia, Bloomberg, and Datastream. The model specifications for each objective were tested using the static panel data method. The panel regressions were estimated using random and fixed effects. Results show that Malaysian post-IPO firms engaged in accruals earnings during post-IPO issuance. Such earnings management was achieved through income-increasing discretionary accruals. All four earnings quality measures were observed in post-IPO firms regardless of their Shariah status. The study findings also revealed that opportunistic behaviour has a direct significant negative effect on earnings quality, while ownership control mechanisms directly affect earnings quality with a positive significant effect. In terms of the interaction effect between the two, the results indicate more effective monitoring by the largest and five largest ownership plays a role in enhancing the earnings quality of post-IPO firms. In general, it can be concluded that majority shareholders play a vital role in keeping checks and balances on these post-IPO firms, thereby protecting minority shareholders and investors. Ownership (majority and minority shareholders protecting minority shareholders and investors) reduces managers’ initiatives to carry out opportunistic earnings management. The findings of this study are significant to both investors and policymakers whereby both, especially the latter, should be mindful of the earnings management phenomenon post-IPO events. More stringent guidelines should be introduced so that financial reporting conforms to actual practice, and not just “window dressing” to deceive stakeholders. Dissertations, Academic Thesis |
| spellingShingle | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| state | Terengganu |
| subject | Ownership structure Corporate governance Earnings quality Opportunistic behavior (Economics) Control mechanisms (Management) Dissertations, Academic |
| summary | The quality of an earnings report, which depends on the information indicative of financial performance, succumbs to the opportunistic behaviour of managers, who manipulate profits and free cash flow to mislead investors. A change from private to public firm status inevitably forces management to report earnings of higher quality. Earnings management post-Initial Public Offerings (IPO) is an important reason investors pay unrealistic prices for their shares. Hence, firm ownership control is expected to constrain earnings management, by limiting managerial discretion, thereby reporting more earnest earnings to investors. Specifically, the study examines the direct effect of opportunistic behaviour measured by profitability and free cash flow, and ownership control mechanisms of the largest and five largest ownerships’ earnings quality for Malaysian post-IPO firms. Furthermore, the study investigates the interaction effect of ownership control mechanisms on the relationship between opportunistic behaviour and earnings quality. This study engaged 300 Malaysian Shariah and non-Shariah compliant post-IPO firms, listed on Bursa Malaysia between 2007 and 2018 (12 years). The data used was secondary financial data extracted from the firm’s financial statements and Bursa Malaysia, Bloomberg, and Datastream. The model specifications for each objective were tested using the static panel data method. The panel regressions were estimated using random and fixed effects. Results show that Malaysian post-IPO firms engaged in accruals earnings during post-IPO issuance. Such earnings management was achieved through income-increasing discretionary accruals. All four earnings quality measures were observed in post-IPO firms regardless of their Shariah status. The study findings also revealed that opportunistic behaviour has a direct significant negative effect on earnings quality, while ownership control mechanisms directly affect earnings quality with a positive significant effect. In terms of the interaction effect between the two, the results indicate more effective monitoring by the largest and five largest ownership plays a role in enhancing the earnings quality of post-IPO firms. In general, it can be concluded that majority shareholders play a vital role in keeping checks and balances on these post-IPO firms, thereby protecting minority shareholders and investors. Ownership (majority and minority shareholders protecting minority shareholders and investors) reduces managers’ initiatives to carry out opportunistic earnings management. The findings of this study are significant to both investors and policymakers whereby both, especially the latter, should be mindful of the earnings management phenomenon post-IPO events. More stringent guidelines should be introduced so that financial reporting conforms to actual practice, and not just “window dressing” to deceive stakeholders. |
| title | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| title_full | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| title_fullStr | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| title_full_unstemmed | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| title_short | 2022_Opportunistic Behaviour, Ownership Control Mechanisms and Earnings Quality of Post- Initial Public Offerings Firms in Malaysia |
| title_sort | 2022_opportunistic behaviour, ownership control mechanisms and earnings quality of post- initial public offerings firms in malaysia |