Azrul Abdullah

Disclosure of Voluntary Accounting Ratios by Malaysian Listed Companies

Accounting ratios are believed to be of fundamental importance in financial analysis, and therefore are useful addition to financial reports. This paper examines the reporting of voluntary accounting ratio by Malaysian companies in corporate annual reports. Drawing on agency and signaling theories, this paper explores whether associations exist between company performance and voluntary disclosure of accounting ratios. In particular, associations are tested between the extent of ratio disclosure and company performance (nmaely profitability, liqudity, leverage, and company effiency), size and industry. Six hypotheses are tested using data collected from 2003 annual reports of 100 Malaysian listed companies. This paper provides evidence that the extent of voluntary ratio disclosure is low; and size, industry as well as liquidity significantly influence the reporting of ratios in corporate annual reports. The implications of these findings are discussed.

A Survey on the Usage of Derivatives and Their Effecton Cost of Equity Capital

Despite familiar concerns about “excessive” speculation, as well as occasional financial blowups involving derivatives, their acknowledged value for hedging and managing financial risks has led to continuing expansion around the world. Derivatives trading exists in most countries with developed financial markets, and new derivatives markets have opened in many emerging market countries as well. In this article, the authors report on a survey of derivatives usage in Malaysia. They document why firms do or do not use derivatives, what kinds of firms and instruments are involved, and how they are handled with regard to governance and accounting within the firm. The most common derivatives in use are foreign exchange and interest rate products. In addition to the inherent difficulty of establishing well-functioning markets in unfamiliar and often complex types of financial instruments that any emerging market country faces, Malaysia has a special challenge because it is a largely Muslim country whose regulatory authorities must take into account the constraints imposed by Shariah law. The authors explain how the main principles of Shariah apply to derivatives and discuss some ways the system gets around them. They also test whether derivatives usage allows a firm to lower its cost of capital, as one might expect if it is managing its risk exposure more effectively, but the survey evidence does not support the hypothesis.

Mode of Islamic Bank Financing: Does Effectiveness of Shariah Supervisory Board Matter?

This paper examines the relationships between the effectiveness of Shariah supervisory board (SSB), their remuneration and mode of financing Islamic bank. The SSB effectiveness is evaluated by an index based on 9 attributes score. This study comprises 18 Islamic banks in which operating in Malaysia from the year 2012 to 2013 as a sample. Our regression analysis shows that the effectiveness of SSB does not concern with the mode of Islamic bank financing. However, we found that SSB remuneration and bank’s financial growth shown a positive and significant relationship with mode of financing. The implications of these findings are discussed.

Investments Information via the Web by Malaysian Listed Companies

Internet technology is believed to improve efficiency and good practice of information dissemination. This paper examined the investment information disclosed by Malaysian Listed Companies via their websites. Evaluations of investment informations disclosure via the websites were based on score towards the disclosure index developed. One hundred companies listed on the Bursa Malaysia’s Mainboard are selected based on their market capitalization. This study identifies the level of investment information disclosure across industry and found that the investment information disclosure and usage of the multimedia are still unsatisfactory. This study also tests the extent of such disclosure with several firm characteristics (profitability, auditor, efficiency and size) and the result shows that only firm’s size is significant. The implications of these findings are discussed.

Relationship between macroeconomic variables and Malaysia available Shariah Indices

This paper aims to study on the association between selected macroeconomic variables and Malaysia Shariah Indices. In our study, we used the Vector Error Correction framework by looking at the long run and short run relationship between macroeconomic variables and (i) Kuala Lumpur Shariah Index (1990-2006), and (ii) FTSE Bursa Malaysia EMAS Shariah Index (2007-2011). Monthly data during the twenty one-year period between 1990 and 2011 are collected and tested. In the long run, the impacts of all selected variables on Kuala Lumpur Shariah index for the period of 1990 to 2006 are positive. However, the effect of increases in consumer price index, exchange rate, Treasury Bill and US Federal Fund Rate on Malaysian Shariah index after the period till 2011 are negative. Besides, this study found positive relationship only in industrial production and money supply for the period of 2007 to 2011. In the short run, mix results were found during 1990 to 2011. The result also shows in overall the variables have unidirectional short run causal effect during the study period. This study then conclude that the standardized set of macroeconomic variables that specified by previous researchers still can be relied but in careful strategy formulation.

Investment information via website by Malaysian listed companies

Internet technology is believed to improve efficiency and good practice of information dissemination. This paper examined the investment information disclosed by Malaysian Listed Companies via their websites. Evaluations of investment informations disclosure via the websites were based on score towards the disclosure index developed. One hundred companies listed on the Bursa Malaysias Mainboard are selected based on their market capitalization. This study identifies the level of investment information disclosure across industry and found that the investment information disclosure and usage of the multimedia are still unsatisfactory. This study also tests the extent of such disclosure with several firm characteristics (profitability, auditor, efficiency and size) and the result shows that only firms size is significant. The implications of these findings are discussed.