Redhwan Ahmed Al-dhamari

An investigation into the effect of surplus free cash flow, corporate governance and firm size on earnings predictability

Purpose - – Existing studies on corporate governance mainly focus on how a strong governance system enhances the valuation of firms with cash holding or free cash flow agency problem. The aims of this paper are threefold. First, it investigates the impact of surplus free cash flows (SFCF) on earnings predictability. Second, it investigates whether corporate governance variables moderate the negative impact of SFCF on earnings predictability. Finally, this study examines whether the ability of corporate governance to mitigate SFCF and improve the predictive value of earnings varies between large and small firms. Design/methodology/approach - – This paper uses heteroskedasticity-corrected least square regressions upon a sample of Malaysian listed firms. Findings - – This paper finds that firms with high SFCF experience less earnings predictability. It also indicates that earnings of firms with high SFCF are more predictable when institutional investors hold a large stake of shares and when a chairperson is independent. Finally, this paper reveals that the role of institutional and managerial ownership in mitigating agency conflict of free cash flow and improving earnings predictability is more prominent in larger firms. This study implies that investors still have reservations about the ability of boards to enhance earnings numbers in Malaysia, although efforts were taken to reform the corporate governance mechanisms following the Asian financial crisis. Originality/value - – This research is considered as the first attempt to examine the relationships between SFCF, corporate governance, firm size, and earnings predictability in a developing county such as Malaysia. The findings of this paper serve as a wake-up call to policy makers to evaluate the importance of governance structure in enhancing earnings predictability in emerging economies.

Cash Holdings, Political Connections, and Earnings Quality: Some Evidence from Malaysia

Purpose - – The purpose of this paper is to investigate the influence of cash holding, political connection and their interaction effect on earnings quality in the Malaysian environment, where political influence plays a vital role in many aspects of business dealings and resources allocation is seriously affected by politics. Design/methodology/approach - – This paper uses ordinary least square and seemingly unrelated regressions upon a sample of the Malaysian top 100 listed firms. Findings - – This paper finds that earnings of firms with excess cash reserves are of high quality. Consistent with previous research, the study finds that investors perceive earnings numbers of politically connected firms as being of low quality. However, this research fails to support an expectation that the adverse consequences of holding a large amount of cash to earnings quality would be more pronounced when political extraction is high. The findings of this study suggest that policy makers should encourage or mandate firms to disclose information in relation to their connections with government, political party, or politicians so that investors and all interested parties can use the information to better assess the firms’ earnings quality. Originality/value - – This research is considered as the first attempt to examine the relationships between cash holdings, political connections, and earnings quality in a developing country such as Malaysia.

Audit Partners Gender, Auditor Quality and Clients Value Relevance:

Several corporate scandals around the world have aggravated the investors’ need for reliable and relevant accounting information. In fact, the study is inspired by prior research which suggests women audit partner or auditor possess a higher level of preparation, risk aversion and ethical behaviour in audit process. Thus, we investigated the possible effect of women audit partner on the client value relevance of accounting information on 2,478 firm-year observations from year 2012 to 2014 for Malaysian listed firms. This article uses time series cross-sectional ordinary least squares (OLS) regressions upon a large sample of the Malaysian listed firms. Basically, the regression results indicate that the signing women audit partner from Big-4 audit firms improves the reliability and value relevance of earnings. Furthermore, our additional analysis shows that firms that engaged the women audit partner from Big-4 audit firms report high relevant equity book values. This study provides a valuable contribution on the positive effect of signing women audit partner from Big-4 audit firms on client value relevance of accounting information to researchers, regulators, investors and all other interested parties in financial information.

The role of corporate governance strength in crisis and non-crisis times

ABSTRACT This study evaluates corporate governance practices of listed firms in the United Arab Emirates and investigates whether corporate governance mitigates/exacerbates the impact of leverage and risk on firm performance during crisis and non-crisis times. The study constructs a corporate governance index not only to examine the dispute of the role of corporate governance during the crisis but also its influence on other factors that fuelled the crisis. A firm-level panel data is used that spans the period 2008–2012 of all listed firms on Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM). The study finds a positive influence of corporate governance strength on the accounting performance, but a negative influence on the firms’ economic performance. In normal times, corporate governance mitigates the negative influence of leverage and risk on the accounting and economic firm performance. However, this synergy effect varies across performance indicators during crisis.

Audit Committee Characteristics and Internal Audit Budget: Malaysian Evidence

In the current competitive business environment, most are increasingly companies that develop processes of innovation (technological and non-technological) to achieve a good performance that translates into success, those who are not absent from barriers. This research examines the effect of barriers to innovation in the business performance between companies of different business stage, measured through the years of operation using a multiple linear regression analysis of the sectors services and manufacturing industry in Chile, a country that is in the first place for innovation in the region of Latin America and the Caribbean. The results show that organizational innovation and marketing innovation have positive, significant and higher effects on business performance in the group of companies in the introductory-growth stage that, for established companies and the barriers of cost, market and regulatory barriers are an obstacle to the development of innovation in the companies studied.