Radiah Othman

Procurement Issues in Malaysia

Purpose- This study was undertaken with the aim of surveying the perception of the two main stakeholders in procurement system; the contractors and the procurement officers on issues such as accountability, transparency, corruption, integrity and cronyism pertaining to the public procurement system in Malaysia. Design/methodology/approach- Interviews were conducted over a nine-month period in 2007 to gauge the perception of the procurement officers and contractors on procurement issues in Malaysia. The interview data were then transcribed and grouped according to six main themes; transparency, procurement policies and procedures and its implementation, personnel involved in the procurement system, estimation/budget/pricing, professionalism and ethics and timeliness. Findings- One of the common complaints made by the contractors was prevalence of interference from outside parties and cronyism, which affects the awarding of contracts. The procurement officers were blamed for malpractice and non compliance to the policies and procedures of the procurement system. Practical implications- The paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents. Originality/value- The paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents and the private sector.

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.

Market Risk Disclosure: Evidence from Malaysian Listed Firms

Purpose - The purpose of this paper is to investigate the market risk disclosure practices among Malaysian listed firms. Specifically, it aims to examine the level of compliance with FRS132: Financial Instruments – Disclosure and Presentation for financial periods beginning or after 2006. Design/methodology/approach - The approach taken is content analysis and coding procedure. Findings - Although a large number of companies have shown compliance with FRS132 in relation to disclosing the financial risk management policy, there are systematic differences across companies in terms of level of details (i.e. qualitative and quantitative) disclosure. Interest rate disclosure was the most mentioned category and the credit risk was the least mentioned category of market risk. There is telling evidence that most Malaysian firms did not engage in hedging any type of market risk over the reporting period of 2006-2007. Research limitations/implications - There is a need for some standardized risk reporting format to achieve greater financial transparency to make investors aware of the market risks. Originality/value - This is believed to be the first study to provide survey findings on the use of derivatives instruments by listed firms in Malaysia.

Implementing School Performance Index (SPIN) in Malaysian Primary Schools

Purpose- The purpose of this paper is to provide an overview of the processes involved in implementing school performance index (SPIN) – a new key performance indicator – and the results of its application in Malaysian public schools. Design/methodology/approach- A sample of 76 Malaysian schools from five districts was selected randomly. The analytical procedures such as documentary analysis, observation and interviews with 101 headmasters and principals, Parents-Teachers Association representatives and brainstorming session with Schools Inspectors was used. Findings- Schools performed differently when evaluated using various criteria of their operational efficiency and effectiveness. The results show that schools, which have scored higher in examination results (test scores) do not necessarily perform in other categories. In fact, the overall SPIN scores indicated they are in the bottom list. Practical implications- SPIN can help authorities to better monitor the operational performance of the schools in providing quality education to future generations of Malaysians. Originality/value- In general, schools’ performance is measured based on students’ examination results (test scores). SPIN is introduced to propose that a school should be measured within its capability as different schools will have different capacity. It is argued that operational efficiency and effectiveness (by incorporating various elements such as leadership,measurement analysis and strategic planning), is a better measure on how the school performs.

Conceptualizing the duties and roles of auditors in Islamic financial institutions: What makes them different?

Purpose - – The purpose of this paper is to describe the role and responsibilities of Shari’ah auditors in Islamic financial institutions (IFIs) in the auditing process in the IFIs, to highlight capacity building challenges in the Shari’ah auditing industry. Design/methodology/approach - – The authors used a legitimacy theory to understand linkages between demand for Shari’ah audit and the role of Shari’ah auditors in IFIs complemented with the review the Accounting and Auditing Organization of Islamic Financial Institutions and Auditing Standard for Islamic Financial Institutions to understand the Shari’ah audit work requirements from an Islamic perspective. Findings - – Shari’ah auditing is an emerging field of investigation. There is no doubt that conventional auditing has a significant influence on the auditing frameworks used in IFIs. Western auditing practices are undergoing a metamorphosis to meet the needs of stakeholders in the Islamic economic system. The role and responsibilities of auditors in IFIs are much broader than those found in conventional banks in relation to an examination of a variety of contracts, product structures, transactions reporting, preparation of financial statements, reports, marketing circulars and any other legal documents, which are pertinent to IFIs’ operations. Practical implications - – We posit that the absence of a proper Shari’ah auditing framework and standards attuned to the needs of an Islamic economic system could dampen the future of the Islamic finance industry. The regulators and management of IFIs should meet the expectations of the stakeholders to whom they owe a duty of care by selecting competent professionals for auditing work, along with transparent policies and systems. Originality/value - – This paper presents an attempt to establish auditors’ roles and responsibilities from an Islamic perspective.

Institutionalization of risk management framework in Islamic NGOs for suppressing terrorism financing

Islamic NGOs established for philanthropic and humanitarian aid in third world Muslim countries have been accused of being involved in terrorism financing. This revelation is to the disadvantage of the donors who do not channel their donations for such activities. We explore the counter-insurgency theory and political process model to explain the current state of counter terrorism activities aimed at Islamic NGOs after 9/11. We believe the idea of money flow disruption to be of greater importance than freezing the accounts to suppress terrorism financing. To complement the various regional and international initiatives championed by APG and FATF to combat money laundering and terrorist financing, we propose risk management framework useful at operational level to detect and prevent welfare activities financing warfare activities.

Enhancing Control Through Participation: Issues of Conflicts in Public Sector Organizations

Public sector site is always known for its continuous games of power and control. Public managers often use control to enhance their power and to legitimise their actions. Empirical evidence showed that during the process of implementing accounting information system (AIS), the management adopted various strategies in securing accountants’ participation such as offering accountants to be part in the implementation process as change agents and change champions. Participation is seen as a mechanism to mitigate resistance and to cement commitment of the accountants to the new AIS which would ultimately produce “consent”. Theoretically, this paper is informed by Tannenbaum & Kahn (1957) contribution to organizational control structure, especially their idea that the total amount of control within an organization can be increased by emphasising decision-making among different organizational members. Nonetheless, this paper argues that multilevel conflicts need to be resolved before participation can be secured and ultimately management control can be enhanced in organizations. The significance of participation in resolving conflicts in the public sector has been under researched and this deficiency remains the focus of this paper. Case studies were conducted in four Malaysian public sector organizations where the interplay of participation, control and conflict were observed and suggestions are proposed for future research.

Corporate social responsibility performance communication and portfolio management

Purpose The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) performance communication and stocks’ performance using socially responsible investment (SRI) portfolio management approach. Design/methodology/approach The authors used the multi-factors models to examine the impact of CSR performance communication on the ex post monthly returns of three distinctly formed portfolios as well as their differential performance from 2001 to 2013 in a small economy of New Zealand. Findings The results show that SRS portfolio comprising of the stocks that demonstrate a relatively less proactive approach to the social and environmental concerns outperforms a stock portfolio that comprises of companies that have a relatively proactive approach to stakeholder engagement referred to as SVS portfolio. Furthermore, the authors’ findings show a positive relationship between social performance and market valuation. This indicates that the market values more stakeholder engagement in regard to social issues than environmental issues. Research limitations/implications The authors’ findings imply that the SRI does make perfect financial sense in a small economy such as New Zealand. The perception of the CSR communication as an “insurance” for mitigation of social and environmental risks is one of the factors driving the valuation of SRI portfolios in New Zealand. Originality/value The authors collected CSR data from the publicly available sources such as the annual reports, the CSR reports and sustainability reports because a layman investor is more likely to rely on these sources in a small economy.

The use of Performance Measurement System (PMS) in transforming public sector organization

The purpose of this paper is to propose how Performance Measurement System (PMS) can be used in enhancing readiness among managers towards the successful implementation of transformation in Malaysian public sector organisations. The proposed research agenda is based on the review of mainstream literature of PMS and its use in public sector change. Despite the paucity of literature on the role played by PMS in transforming public sector entities, this paper highlights the gap between the use of PMS and readiness for transformation (RFT).

Determinants and Persistence of Research and Development Investments Evidence from Malaysia

Purpose – The purpose of this paper is to investigate the determinants and persistence of research and development (R&D) investments in Malaysia.Design/methodology/approach – The approach involves a regression analysis.Findings – The regression analysis shows that lagged absorbed slack defined as the ratio of selling and administrative expenses to total sales and sales growth have positive affect on the R&D expenses, whereas diversification has negative impact on R&D expenses after controlling for leverage and profitability of the firms. Persistence in the firm-level R&D expenses is found. Occasional tendency among firms to cut down R&D spending over the period of 2000-2005 is found.Research limitations/implications – Sample size is a limitation.Practical implications – The findings have implications for the corporate governance and innovation charter of the firms.Originality/value – The paper provides useful information from Malaysia regarding the determinants and persistence of R&D investments.