Muhd Kamil Ibrahim

IC Disclosures in IPO Prospectuses: Evidence from Malaysia

Purpose- This study aims to investigate the factors influencing the disclosure of intellectual capital (IC) information in the Malaysian initial public offering (IPO) prospectus using multiple regression analysis. Design/methodology/approach- The sample consists of 130 companies in the technology and industrial products sectors of Bursa Malaysia that went through an IPO between 2004 and 2008. Initially, the extent of the IC disclosure index is quantified using content analysis methodology. The multiple regression analysis is then used to examine the associations of nine potential explanatory variables with IC disclosure level. Findings- In general, the results provide evidence that board size, board independence, age, leverage, underwriter and listing board significantly influence the extent of IC disclosure in an IPO prospectus. Nonetheless, the effect of each explanatory variable may vary in each estimated parameter of the multiple regression models. Three variables, board diversity, size and auditor, were not significant. Originality/value- Although many studies have examined the content of and reasons for IC disclosures, this study provides empirical evidence in this specific area, i.e. to explore the determinants of IC disclosure, particularly from the perspective of IPO prospectuses, in emerging countries such as Malaysia.

Value Relevance of Book Value and Earnings: Evidence from Two Different Financial Reporting Regimes

This study aimed at investigating the value relevance of book value and earnings and the relationship between earnings and operating cash flow of two different financial reporting regimes in Malaysia. A market and nonmarket valuation approaches were utilised for that purpose. The result of market valuation approach of pool sample shows that book values and earnings are value relevant. We also observed that the change in financial reporting regime affects significantly the value relevance of book value and but not earnings. While book value and earnings are value relevant during the MASB period, only book value is value relevance during the FRS period. The result of non‐market valuation approach on the other hand, shows that the change in financial reporting regime has no significant effect on the relationship between earnings and operating cash flow. The result of market valuation approach implicates that the introduction of new or improved standards under FRS regime strengthen the position of book value thus leaving earnings behind in equity valuation. The result of non‐market valuation model implicates that the level of relationship between earnings and operating cash flow persists as long as operating cash flow comprise of cash and cash equivalent components whereas earnings comprise of cash and accruals components. The study contributes to the existing literature in the area of the effect of adoption of FRS on value relevance of accounting numbers in Malaysia.

Intangible assets valuation in the Malaysian capital market

Purpose – This study examines the intangible assets value of the Malaysian market. It measures the relationship between intangible assets and corporate market value of Malaysian firms and whether they are consistent with findings in other advanced markets.Design/methodology/approach – Firstly, the development of intangible assets of Malaysian companies over 2000 to 2006 were measured statistically using Landsmans balance sheet identity model. Then, cross‐sectional multi‐regression procedure was used to ascertain the relationship between intangible assets and financial performance.Findings – The findings reveal that the Malaysian market developed intangible assets at a rather slow pace, with significant development from year 2004 onwards. It also reveals that the book value of net assets (BVNA) are still dominant in Malaysian corporate valuation but this trend is declining as greater interest has now been developed in employing intangible assets and earnings as important variables. Furthermore, the result...

Balanced scorecard equity valuation model

This paper develops an improved equity valuation model that predicts firms market value using firms Balanced Scorecard (BSC) metrics. It is developed in response to the declining association between market value and, book value and earnings. A 10-year data of 300 firms listed on Bursa Malaysia Main Market was selected as sample. The data of market value and BSC measures were transformed into their natural log form (ln) in order to obtain normal and compatible data. The model shows that BSC better explains the market value than the conventional models.

Malaysia: Value Relevance of Accounting Numbers

The increasing demands placed on businesses to fulfill its social responsibilities have heightened interests in corporate donations. Corporate donations exist when a corporation donates a portion of its resources to a societal cause. In addition, corporations have developed a wide array of charitable vehicles, namely, foundations, non-profit and association umbrella groups, as well as community outreach programs. Studies on this particular topic have been carried out in other markets such as the United States and the United Kingdom as well as in Europe. Being the first research in Malaysia, the goals of this study were (1) to examine whether stakeholders especially investors consider corporate donations when they determine the value of the firm, (2) to test empirically the determinants (i.e., leverage, firm’s size, and profitability) of corporate donations made by 774 Malaysian Public Listed Companies of the Main Board. Three of the firms’ specific characteristics were derived from agency and stakeholder theories. Firstly, multiple regression analysis was conducted in order to examine the perception of the stakeholders, especially investors, on the corporate donations. Secondly, a logistic regression analysis was conducted in order to examine the determinants of corporate donations made by the Public Listed Companies in Malaysian market. The results revealed that there is a positive relationship between corporate donations and the market value of equity. This study also revealed that there is no significant relationship between the leverage and the corporate donations. This result contradicts the findings of some other researches. However, the study provides evidence that the company size and profitability are important determinants of companies that are more likely to contribute to the society.

Income Smoothing and Market Perception of Accounting Numbers: An Empirical Investigation of Extraordinary Items

This paper examines issues related to the reporting of extraordinary items in the financial statements of Malaysian companies. The first issue concerns the change of accounting standards on extraordinary items, which has limited the scope of extraordinary items. It is found that there are significant changes on the incidence of reported extraordinary items during the period after the adoption of the new standard. The findings supported the argument that the new standards on extraordinary items had consequently reduce significantly these items from financial statements. This paper hypothesizes that extraordinary items classification choice is a means used by companies to smooth income. Two types of statistical tests performed have confirmed the proposition that the disclosure of extraordinary items is subject to this type of manipulation during the period before the adoption of the new standard. Although it is proved that the broad definition of extraordinary items allows companies to manipulate income, evidence gathered from multivariate regressions demonstrates that extraordinary items are of value‐relevance for investors in valuing a firm’s equity. Thus, investors take into account the extraordinary items even though it is disclosed “below the line”.

Tangible and intangible non-current assets: Evidence of information content during economic crisis period

In this paper, we investigate the information content of non-current assets (NCA) among firms listed on the main board of Bursa Malaysia. Specifically, we investigate the information content of tangible and intangible NCA during the economic crisis period of 1997–1998. Our empirical analysis uses time-varying and fixed effects models for the period 1995–1999. We measure information content based on the association of analysts’ earnings forecasts errors (AFE) with both capitalized tangible and intangible NCA. We find evidence of higher information content in tangible NCA compared to intangible NCA during the Asian economic crisis period of 1997–1998. Our evidence is consistent with the assumption that tangible assets are more reliable compared to intangible assets for prediction of expected cash flows during economic crisis periods.

The Relevance of Balanced Scorecard in Predicting Future Market Price

This paper investigates the ability of Balanced Scorecard (BSC) measures in predicting future market price. A 6-year data of Malaysian listed firms was selected as sample. The results show that firms BSC measures are able to predict future market price of Malaysian firms.

RETRACTED ARTICLE: The relevance of balanced scorecard in predicting future market price

This paper investigates the ability of Balanced Scorecard (BSC) measures in predicting future market price. A 6-year data of Malaysian listed firms was selected as sample. The results show that firms BSC measures are able to predict future market price of Malaysian firms.

An analysis of intellectual capital disclosure in Malaysian IPO prospectuses

The purpose of this study is to analyze the content of prospectuses and determine the factors influencing IC disclosure of 225 sample companies applied for initial listing on the Bursa Malaysia from 2004 to 2008. The extent of IC disclosure is gauged using content analysis methodology. The findings provide evidence on firms growth, auditor and culture influence on the level of IC disclosure.