Norhana Salamudin

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...

DEA portfolio selection in Malaysian stock market

The purpose of this paper is to investigate the effectiveness of data envelopment analysis (DEA) model on portfolio selection for investors over long horizon in the Malaysian stock market. This paper employs the technical efficiency DEA model to evaluate the firms efficiency. Then, the efficient firms are selected for the portfolio formation. The scope of this paper incorporates all companies of the property sectors of Bursa Malaysia from 2004 through 2005. The results demonstrate that the Technical Efficiency Portfolio seems to produce significant cumulative abnormal returns over the 36-months holding period. In a nutshell, the empirical findings suggest that the DEA models effectively can be used as a tool in helping investors for their portfolio selection over long-term in Malaysian stock market.

Determinants of Indirect Financial Distress Costs

This paper examines the impact of firm-specific factors on the size of indirect financial distress costs for Malaysia’s financially distressed firms. The results provide an insight into the magnitude of the indirect financial distress costs and its determinants and perhaps are one of the first to provide empirical evidence on the determinants of indirect financial distress costs for Malaysia’s financially distressed firms. The results show that the average indirect financial distress cost measured by capital discount is 0.56 % and varies considerably among firms. It also suggests that only two variables, assets intangibility and size, are statistically significant at the .01 significance level.

Indirect Financial Distress Costs: Evidence from Trading and Services Sector

The aim of this paper is to provide a quantitative estimate of the indirect financial distress costs. This paper focuses on the Malaysian trading and services sector and concentrates only on measuring the financial distress costs in terms of changes in operating performance and changes in capital values. This study will contribute to the existing literature by providing an alternative proxy for indirect financial distress costs and perhaps the first paper to provide the quantitative estimate of the costs for Malaysia’s financially distressed firms. Findings from our study suggest that indirect costs exist and are found to be between 3.1 and 21.39 %. In addition to that, this paper also provides an empirical support that the indirect financial distress costs increase and become apparent as the firms near financial distress.

Level of Cash Flow Rights of the Ultimate Owner on Value Relevance of Earnings Information of Pyramid Structure Firms

The objective of this study is to ascertain whether the higher level of cash flow rights (CFR) in the hand of ultimate owner help to improve the value relevance of earnings information in pyramid structure firms. The separation of cash flow rights (CFR) and control rights (CR) in pyramid structure firms has entrenched the ultimate owner and provide them with opportunities to manipulate earnings information, which in turn reduce the value relevance of the earnings information reported. This study hypothesizes that the higher level of cash flow rights (CFR) in pyramid structure identified will help to reduce the agency problem between ultimate owner and minority shareholder by reducing the opportunity of ultimate owner to manipulate earnings information, which will increase the value relevance of earnings information in pyramid structure firms. The sample of this study consists of pyramid structure firms in Malaysia for the period of 1990 to 2010, where the identity of the ultimate owner is pyramidal ownership. Earnings return model with the interaction between earnings information reported by pyramid structure firms and the level of cash flow rights (CFR) of ultimate owner is provided to show the effect on the earnings-return relationship in an attempt to measure the value relevance of earnings information reported. Positive earnings-return relationship and higher adjusted R2 indicate that earnings information is value relevant and vice-versa. Using Panel Generalized Least Square (GLS) estimation, the results show that the presence of higher level of cash flow rights (CFR) in pyramid structure is significant to minimize and mitigate the negative effects of the structure based on higher adjusted R2 reported within positive earnings-return relationship.