Mohammad Talha

Sensitivity of profitability to working capital management: a study of Indian corporate hospitals

Working capital management almost always determines the ability of a firm to earn profit. Efficiency with which a firm handles working capital ensures prosperity while neglect would spell danger for the very survival of the firm. The study focuses on the impact of working capital management on profitability of selected Indian corporate hospitals. The time span is ten years from 1996 to 2006. The results of regression analysis point out that the current ratio, cash turnover ratio, proportion of current assets to operating income and leverage have a negative influence on profitability. Stepwise regression analysis has identified seven prominent variables that significantly influence profitability. Path analysis reveals that quick ratio has the highest direct effect on profitability, while current ratio has the least direct effect.

B2C e-commerce in Malaysia: Perceived Characteristics of Innovating and trust perspective

This paper examines the acceptance of Business-to-Consumer (B2C) e-commerce in a developing country. The purpose of this paper is to develop a framework to explain B2C e-commerce adoption among Malaysian consumers based on Perceived Characteristics of Innovating (PCI) theory integrated with Trust. The findings indicate that perceived ease of use, result demonstrability, compatibility and relative advantage are strong predictors of consumers intention to use e-commerce in Malaysia. Surprisingly, perceived trust has weaker impact on consumers intention to use e-commerce in Malaysia compared to the other independent constructs. Based on the findings, we offer key research, practice and policy implications.

Corporate social responsibility disclosure and corporate governance in Malaysia

Using 743 Malaysian public listed companies, this study attempts to investigate the impact of corporate governance mechanism on corporate social responsibility (CSR) disclosure level and to examine the difference of CSR disclosure level in government-linked companies and non-government linked companies. Employing multivariate analysis, the study reveals that the presence of larger non-executive directors and a higher involvement of institutional shareholders, which is dummied by government-linked companies cause significant increase in level of CSR disclosure. Besides, even though statistically insignificant, the duality role negatively affects disclosure level. In addition, existence of larger number of independent non-executive directors and employment of big four auditing firms contribute towards increased disclosure of CSR. This study is expected to add to the existing accounting literature by introducing instrument in measuring CSR disclosure and benefits regulators in improving corporate governance initiative in developing economic environment.

What prompts firms to choose between business and geographic segments as a primary segment

Purpose - The purpose of this paper is to investigate what causes a firm to choose between a business segment and a geographic segment as a primary segment for its segmental information disclosure. It seeks to examine Malaysian firms experiences as they disclose segmental information under the new accounting standard known as FRS 114, Segment Reporting. Design/methodology/approach - The paper involves 374 Malaysian public-listed companies which disclosed segmental information in their 2006 annual reports. Four hypotheses are developed to examine the influence of these five factors, namely the size of the company, listing status, financial leverage, financial performance, and industrial membership. The non-parametric test is employed to test the formulated hypotheses. Findings - The results reveal two important outcomes: first, size of company, financial performance, and industrial membership are significantly associated with the choice of a primary segment; and financial leverage of a company and listing status are not significantly associated with the choice of a primary segment. Research limitations/implications - The limited number in the sample and inherent segmental reporting problems present limitations. Practical implications - The paper implies extensive auditing work as the new standard requires more extensive disclosure for the primary segment, although the standard allows the adoption of primary segment reporting at managements discretion. Originality/value - The papers value lies in determining what motivates a company to disclose a business segment or a geographic segment as its primary segmental reporting basis.

Segmental reporting and competitive disadvantage: a study of Malaysian companies

This study aims to investigate whether competitive disadvantage is experienced by Malaysian companies as they disclose segmental information under the new accounting standard known as FRS 114, Segment Reporting. The study consists of 374 Malaysian publicly listed companies which disclosed segmental information in their 2006 annual reports. Four hypotheses were developed to examine the relationship between segmental reporting disclosure and competitive disadvantage. The logistic regression model was employed to test the formulated hypotheses. The results reveal four main points: a) smaller companies experience greater competitive disadvantage than larger companies as they disclose segment information; b) disclosing the business segment as the primary segment does not lead to greater competitive disadvantage; c) companies which are highly leveraged do not experience greater competitive disadvantage as they disclose segmental information; d) there is no significant association of competitive disadvantage with industrial membership. The insights of this study should benefit various interested stakeholders, as Malaysian companies adopt the new FRS 114, Segment Reporting which calls for more extensive reporting compared to the old standards, IAS 14 and MASB 22.

Avoiding losses and earnings decrease by Malaysian companies before and after major corporate governance initiatives

This paper investigates the distribution of the cross-sectional earnings per share and changes in earnings per share to exceed two psychological benchmarks that are avoiding losses and avoiding earnings decrease using sample of 4,565 firm years and 1,530 firm years of Malaysian public listed companies respectively covering financial data from 1994 to 2003. This study further compares the smoothness of the distribution of deflated earnings and changes in deflated earnings before and after the Asian financial crisis. It is found that Malaysian companies do avoid reporting losses even after the major reforms on corporate governance. However, the study found no tendencies among the firm to avoid earnings decrease. This research might be of interest to regulators as to where to look in conducting their oversight function, i.e. firms reporting small EPS just to avoid losses and reporting small EPS decrease may require closer scrutiny.

Exploring the usefulness of comprehensive income: an empirical study

Statement of Financial Accounting Standards (SFAS) No. 130 and the International Accounting Standards Board (IASB) require companies to report their comprehensive income in their primary financial statements. The Financial Accounting Standards Board (FASB) permits companies to present comprehensive income in three different ways: 1) in the income statement; 2) in a separate statement of comprehensive income; 3) in the stockholders equity statement. This paper focuses on testing whether the new comprehensive income reporting formats affect users judgement when valuing companies. The results indicate that alternative presentation formats do not influence users processing of comprehensive income information. In other words, reporting comprehensive income in a separate statement or in the income statement does not add more relevant value than reporting it in the stockholders equity section.

Determinants of Corporate Social Reporting in India

Corporate Social Reporting (CSR), which stems from the root of Corporate Social Responsibility of a corporation, is gaining importance across nations. As a research theme, CSR has attracted the attention of many researchers who have explored the concept from different perspectives. The present paper examines the extent of corporate social reporting and the variables that determine it. Based on market capitalization, the top 100 companies included in BSE 200 of Bombay Stock Exchange, India, have been included in the study. Data required have been obtained from the annual reports of the companies for the period from 2007–08 to 2011–12. Content analysis reveals that companies report extensively on ‘community involvement’. The determinants of corporate social reporting have been identified through multiple regression analysis. The variables that have been tested are size, age, nationality, industry type, ownership, liquidity, leverage, profit, dividend, reserves, and gross fixed assets. Corporate Social Reporting Index—constructed based on the number of CSR components a company reports—has been regressed on the select variables. The results indicate that Size, Nationality, Industry Type, Ownership and Leverage determine the level of corporate social reporting of Indian companies.

An analysis of moral intensity, intention and socially responsible investment behaviour among fund managers of Malaysian unit trust companies

This study examines the impact of moral intensity on perceived socially responsible investment (SRI) behaviour. Questionnaires have been distributed to 320 fund managers. On a scrutiny of the sent-in questionnaires, it has been found that only 73 are fit for further processing. Structural equation modelling analysis showed the goodness of fit for the model indicating the appropriateness of the use of instrument and measurement. The analysis found that perceived potential benefit has a significant and positive direct effect on perceived SRI behaviour. Besides, it has a significant and positive indirect effect on perceived SRI behaviour through intention variable. However, the study found no evidence to support the influence of perceived social pressure. Even though limited by a lower response rate, the studys outcomes provide good understanding on the interaction of moral intensity components, intention and behaviour in the context of socially responsible investment in emerging economies like Malaysia.

EXPLAINING SRI BEHAVIOUR OF MALAYSIAN UNIT TRUST FUND MANAGERS USING THEORY OF PLANNED BEHAVIOR

This study aims to examine the impact of Theory of Planned Behavior components – attitude, subjective norms and perceived control behavior on perceived socially responsible investment (SRI) behavior among fund managers of unit trust fund companies with intention to engage in SRI as a mediating variable. This cross sectional study employs questionnaire to collect the opinion from respondents. Three hundred and twenty questionnaires have been distributed but only 84 have been returned by the fund managers, with a response rate of 26.25 per cent. A scan of such questionnaires further revealed that only 73 could be taken up for analysis. Thus, the usable rate is 22.81 percent. Structural Equation Modeling (SEM) that has been used in the study has revealed that the model has a good fit for the model (above minimum requirements for goodness of fit criteria) which indicates the appropriateness of instrument and measurement. The analysis shows that subjective norms have significant and positive direct effect on perceived SRI behavior. In addition, subjective norms also have a significant and positive indirect effect on perceived SRI behavior through intention to engage in SRI. Attitude has a positive and significant direct impact on intention, while it does not have a significant direct effect on perceived SRI behavior. Besides, the study has evidenced significant direct effect of intention on perceived SRI behavior. However, the study has not found any evidence to support the association of perceived control behavior with intention and perceived SRI behavior. The major limitation of this existing study is a lower response rate; nevertheless it provides good understanding on the interaction of attitude, subjective norms, perceived control behavior, intention and behavior in the context of socially responsible investment in emerging economies like Malaysia.