Noor Afza Amran

Family Business, Board Dynamics and Firm Value: Evidence from Malaysia

Most research concentrating on family and non‐family businesses with firm performance is conducted overseas with little research actually taking place in Malaysia. Thus, this study focuses on the relationship between family controlled businesses and corporate governance mechanisms with firm value among Malaysian companies. The sample size of this study is 896 companies that were listed on Bursa Malaysia from 2000 to 2003. The findings reveal that corporate governance mechanisms do have an influence on firm value in Malaysia. However, not all elements of governance mechanisms are significant, and the effects differ between family‐businesses and non‐family businesses. The results indicate as expected that board size and leadership structure affect the firm value for all companies. Further analysis shows that family businesses do practice separate leadership structure whilst board size contributes positively towards better performance in non‐family companies. More importantly, family and non‐family businesses are different in terms of corporate governance practices. Thus, regulators need to give additional attention to the unique setting of the family companies.

The value relevance of purchased goodwill in Malaysian firms: the pre- and post-IFRS evidence

Following the adoption of International Financial Reporting Standards (IFRS) in Malaysia, the accounting for goodwill has changed from systematic amortisation to a method based solely on periodic impairment testing.The objective of the impairment test is to ensure that reported goodwill does not have carrying amount in excess of its recoverable amount.Nevertheless, many critics suggest that the new method may allow managements to engage in opportunistic earnings manipulation activities.In this study, we examine the question of whether goodwill is more value relevant after adoption of an IFRS in Malaysia. Using panel data of non-financial firms listed on the Bursa Malaysia over the period from 2002 to 2010, we find evidence that goodwill is not value relevant in either the pre-and post IFRS periods. These findings are in line with the opponents of the new standards, who claim that, the use Fair Value Accounting (FVA) in the reporting of goodwill increases the opportunities for managerial opportunisms.Therefore, the consequences FVA devoid of relevant information for shareholders.We conclude that the existence of an unfavorable environments in Malaysia impedes efficient implementation of the new impairment regime.

Do big 4 auditors improve the ability of goodwill to forecast future cash flows? the Malaysian evidence

The accounting rules prescribed in Malaysian Financial Reporting Standard (MFRS) 3, Business combination, and (MFRS) 136, Impairment of Assets, give managers considerable reporting discretion in allocating goodwill and estimating its actual value. Agency theory predicts that managers may use the accounting discretion granted by the new rules to pursue their own interests at the expense of shareholders.Hence, auditors are required to exercise professional judgement when investigating hard-to-verify management assumptions and valuations.We exploit this issue by examining whether predictive ability of goodwill improved in the presence of Big 4 auditors. We provide evidence that goodwill has a significant predictive ability for second and third-year ahead cash flows which exists only in the firms audited by the large international reputable accounting firms.This suggests that Big 4 auditors play an important role in ensuring appropriate implementation of the present accounting for goodwill.

Implementation of Good Corporate Governance Mechanisms on Family Firm Performance in Indonesia

The aim of this study is to examine the relationship of good corporate governance on family firms’ performance in Indonesia.This study used 125 of family companies on Indonesia Stock Exchange from 2010 to 2014 as a sample size.This study contributes to literature on family corporate governance and firm performance. Empirical evidence leads the family corporate governance and firm performance with mixed results.This study focuses of companies who have at least 20% shareholders or more which own by families.The findings reveal that board size and debt has a positive relationship with family firm performance.Larger board size is give more resource and has high solving problem capabilities than smaller board of director.However, board commissioner of independent does not contribute to firm value.Further, manager who has high portion managerial ownership would lead these managers concern on personal interest rather than firm’s interest.Next, Debt help financial problem in companies while running the business and achieve the high performance and small size of company enhance the firm performance.Further, this finding is to enrich the literatures on family corporate governance and firm performance especially in Indonesia.

Gender diversity: Does ‘relationship’ jeopardise performance?

The objective of this paper is to examine women relationship with other directors and firm performance.Specifically we test for the effect of percentage of women and women relationship on firm accounting performance. The sample uses 263 listed companies on the Main Market of Bursa Malaysia that have women on boards from 2010 to 2012. The results show that women representations on the board do not enhance firm performance.We also find that appointment of women director based on relationship with other board members decreases firm performance. The appointment of women directors on the boards are influence by networking, relationships or family ties.Thus, these findings provide some implications for future study on women and firm performance.

Earnings informativeness, board size, board composition and board leadership structure

One of the functions of board of directors is to monitor the quality of financial reporting.Therefore, it is important to understand whether board of director characteristics influence the quality of financial reporting.This paper examines whether earnings informativeness varies with board size, board composition and board leadership structure. We measure earnings informativeness by earnings and stock returns relationship.Our data consists of 3,761 firm-year observations of Malaysian firms listed on Bursa Malaysia over the period 2001–2012. Our results show that earnings informativeness is greater for firms that separate the roles of Chairman and CEO. However, the evidence shows that earnings informativeness does not vary with board size and board composition.