Roszaini Haniffa

Culture, Corporate Governance and Disclosure in Malaysian Corporations

Evidence from research conducted on corporate accounting indicates that the interaction of environmental factors in fluences disclosure practices. The purpose of this study is to examine the importance of various corporate governance and cultural (race and education) characteristics, in addition to firm–specific factors, as possible determinants of voluntary (non–mandatory accounting and non–accounting information) disclosures in the annual reports of Malaysian listed corporations. The results of the regression analysis indicate significant associations (at the 5 per cent level) between two corporate governance variables (viz. chair who is a non–executive director and domination of family members on boards) and the extent of voluntary disclosure. This finding has implications for corporate governance policy formulation by the Malaysian Institute of Corporate Governance (MISG). One cultural factor (proportion of Malay directors on the board) is significantly associated (at the 5 per cent level) with the extent of voluntary disclosure suggesting that governmental focus on culture may solicit a response to secrecy from those who feel threatened.

Corporate Governance Structure and Performance of Malaysian Listed Companies

This study investigates the relationship between the corporate governance structure and performance of 347 companies listed on the Kuala Lumpur Stock Exchange (KLSE) between 1996 and 2000. We found board size and top five substantial shareholdings to be significantly associated with both market and accounting performance measures. In addition, we found a significant relationship between multiple directorships and market performance while role duality and managerial shareholdings are significantly associated with accounting performance. The result is robust with respect to controls for gearing, company size, industry membership and growth opportunities.

Intellectual capital disclosure and corporate governance structure in UK firms.

Abstract This paper investigates the relationship between intellectual capital disclosure and corporate governance variables, controlling for other firm‐specific characteristics, for a sample of 100 UK listed firms. Intellectual capital disclosure is measured by a disclosure index score, supported by word count and percentage of word count metrics to assess the variety, volume and focus of intellectual capital disclosure respectively. The independent variables comprise various forms of corporate governance structure: board composition, ownership structure, audit committee size and frequency of audit committee meetings, and CEO role duality. Results of the analysis based on the three measures of intellectual capital disclosure indicate significant association with all the governance factors except for role duality. The influence of corporate governance mechanisms on human, structural and relational capital disclosure, based on all three metrics, is also explored.

Corporate Governance Quality, Audit Fees and Non-Audit Services Fees

This paper extends prior research on the relationship between governance quality and auditor remuneration. We examine the influence of audit committee effectiveness (ACE), a proxy for governance quality, on audit fees (AF) and non-audit services fees (NASF) using a new composite measure comprising audit committee independence, expertise, diligence and size. We find that after controlling for board of director characteristics, there is a significant positive association between ACE and AF only for larger clients. Our results indicate that effective audit committees undertake more monitoring which results in wider audit scope and higher audit fees. Contrary to our expectations, we find the association between ACE and NASF to be positive and significant, especially for larger clients. This suggests that larger clients are more likely to purchase non-audit services (NAS) even in the presence of effective audit committees probably due to the complexity of their activities. Overall, our findings support regulatory initiatives aimed at improving corporate governance quality.

Exploring auditor independence: an interpretive approach

Purpose - The purpose of this paper is to explore the construction of the meanings of auditor independence (AI) in an oil-rich autocratic state with an ideology straddling liberal market capitalism and Design/methodology/approach - The concept of AI was explored using Blumers interactionist approach or the Chicago School of Symbolic Interactionism (CSSI). Multiple methods were adopted in collecting and interpreting data: document analysis, personal professional experience, observation and interviews with auditors in two audit firms in Saudi Arabia. Findings - Using discourse analysis, the paper demonstrates that auditors construct the meanings of independence in appearance and in fact through their social interactions at three levels: micro (personal self-reflexivity through ethical reasoning and reputation of individual auditor); meso (organisational culture through range of commercial activities and image management) and macro (through political, Originality/value - The paper contributes to the auditing literature by providing insights into the construction of the meaning of AI in a context different from the dominant Anglo-American discourse, as well as transition and emerging economies discourse. The paper also contributes to the CSSI research methodology by extending it to consider interactions not only within an organisational context, but also within the context of a country.

Episodes in the Malaysian auditing saga

Purpose – The purpose of this paper is to examine the various episodes in the Malaysian auditing saga, covering the period of the first 40 years post-independence in 1957 to just before the onset of the Asian Financial Crisis in 1997. Design/methodology/approach – Based on documentary analysis, the paper offers a historical account of the development of the auditing profession with reference to the dynamic changes in its political and socio-economic environment. Findings – The paper concludes that the function of auditing in Malaysian society responded to political-economic pressures over time viz. changing from maintaining the economic policy to serve Western investors to accommodating ethnic relations, and to strengthening the bond between local and global corporate elites and the political leaders. Originality/value – Since, little is known of the professionalisation process in Malaysia, our analysis of the structural conditions during the 40 years from the achievement of independence from the British in 1957 to just before the onset of the Asian Financial Crisis in 1997 and our assessment of their implications for auditing contributes to knowledge in this area

Human capital disclosures in developing countries: figureheads and value creators

Purpose - – The purpose of this paper is to explore if any disparity exists between human capital information desired by financial analysts and fund managers and actual disclosure of such information in company annual reports, in the context of developing countries. Design/methodology/approach - – Financial analysts and fund managers were interviewed to obtain opinions on the importance attributed to human capital information and whether their desired information is disclosed in the annual reports. Content analysis was then used to assess the extent and nature of human capital information actually provided in the annual reports of 100 listed companies in Malaysia. Findings - – Interviewees seek information on company management and key corporate decision makers who could provide a firm with competitive advantage. However, the human capital information provided is limited, and tends to focus on directors, many of whom may be figureheads with little impact on the way companies are run and in creating value for the firm. Accordingly, analysts rely on alternative sources to get their desired information – a costly process for private shareholders. Originality/value - – The paper contributes to the literature on the demand for, and disclosure of, human capital information in the context of developing countries. It identifies the inadequacy of current human capital disclosure practices in company annual reports. The authors theorise that in developing countries, resource dependence, legitimacy-seeking and “culture” cause companies to pay relatively more attention to figureheads than value creators.

The two Ws of Islamic accounting research

Purpose – The purpose of this paper is to introduce the new journal and articles in the first issue.Design/methodology/approach – The paper attempts to introduce the journal by answering the two “W” questions – what is Islamic accounting and why Islamic accounting research is important. In doing so, it indirectly highlights the need for a specialist journal like Journal of Islamic Accounting and Business Research (JIABR) and the potential research areas.Findings – Islamic accounting research is still at the infancy stage compared to Islamic banking and finance. One of the reasons is due to lack of exposure of research conducted in the area at international level, ending up with only a few issues getting attention. Similarly, the lack of a platform where researchers interested in the area could showcase the diverse range of research as well as network and get support on their research hindered the progress of research in this area. Hence, JIABR could be the leading journal in the area of Islamic accounting...

Determinants of zakah (Islamic tax) compliance behavior

Purpose – The purpose of the paper was to examine factors influencing business zakah compliance behavior. Design/methodology/approach – The theory of reasoned action (TRA) was adopted to investigate whether attitude, subjective norm and intention were the determinants of zakah compliance behavior based on questionnaire survey of 227 active businessmen in one district in Malaysia. Findings – Results indicate intention to be a significant predictor for zakah compliance behavior. Intention is further found to be influenced by both attitude and subjective norm, and it mediates the relationship between both factors with business zakah compliance behavior. Practical implications – As attitude, subjective norm and intention are found to influence business zakah compliance behavior, zakah institutions should give serious attention on these factors to improve their zakah collection in the future. Originality/value – The study supports the argument that in a loosely regulated environment like zakah, the TRA can sti...

Determinants of financial performance of Islamic banks: An intellectual capital perspective

Purpose The purpose of this paper is to empirically examine the effect of intangible resources, i.e. intellectual capital (IC) on financial performance of 64 Islamic financial institutions (IFIs) operating in 18 different countries for the period 2007-2011, while controlling for firm-specific variables, namely, bank size, level of risk, listing status, and firm complexity. Design/methodology/approach The required data to calculate different constituents of IC are derived from Bankscope database. Value Added Intellectual Coefficient (VAIC) methodology devised by Pulic is used to determine the impact of IC on financial performance of IFIs. Findings Results indicate a significant positive relationship between VAIC and accounting performance based on return on assets (ROA). The results further indicate a significant positive relationship between accounting performance and capital employed efficiency (CEE) and human capital efficiency (HCE), but no significant relationship with regards to structural capital efficiency. Overall, the results suggest that value creation capability of IFIs is highly influenced by HCE and CEE. Research limitations/implications The main limitation of the present study lies in its methodological tool, the VAIC methodology, which has been criticized by some researchers as not really measuring IC. Despite the inherent limitation of the VAIC methodology which relies on secondary data published in annual reports, it is still considered by some researchers as one of the best available tool to measure firms’ IC in the absence of access to detailed internal information on IC. Practical implications The findings may serve as a useful input for Islamic bankers in managing their investments in IC within their institutions. Originality/value The main contribution of this paper is to use a previously little-studied area, Islamic banking and finance, to identify the effect of intellectual capital on performance.