S. Susela Devi

The impact of government and foreign affiliate influence on corporate social reporting: The case of Malaysia

Purpose - This paper seeks to investigate the influence of government and foreign affiliates, particularly; multinational companies on corporate social reporting (CSR) development in an economy, where CSR awareness is low coupled with weak pressure group activism. Design/methodology/approach - This is a cross sectional study that focuses on the information contained in the annual reports for year 2002/2003. This research uses content analysis as method to measure the extent CSR. Findings - Based on regression analysis, the study evidences on the impact of government influence. However, the impact of foreign affiliation variables is not evident. Institutionalisation of the governments aspirations and commitment to CSR is perhaps the most appropriate description for Malaysian CSR practice. Research limitations/implications - There are two main limitations of this study. Firstly, this study examines the annual reports for one year. Secondly, this study is annual reports centric. It does not examine any other stand alone reports that the respondents might have produced on the subject of society and the environment. Practical implications - This study provides justification for governments role in promoting CSR practice. The impact is evidenced although there are no direct concerted efforts at that time by the government in respect of CSR policy implementation. The significant role is attributed to the unique Malaysian socio economic structure. Originality/value - This study contributes to the CSR literature particularly in the context of economies where governments play a significant role in promoting economic development. It provides empirical evidence of the influence of government and foreign affiliates. It also adds to the literature by explaining the phenomenon from the Institutional perspective and its relevance to a developing economy.

Corporate Social Reporting in Malaysia: an institutional perspective

An increasing trend is observed among Malaysian corporations in disclosing social and environmental information (ACCA, 2002). However, it is unclear as to why Malaysian companies produce Corporate Social Reports voluntarily. Extant literature reveals a gap in identifying an appropriate theory to adequately explain CSR. This study investigates the applicability of Institutional Theory to enable an understanding of the Malaysian CSR phenomenon. Interviews with senior management of ten Malaysian companies practicing CSR provide grounded qualititative data to determine motivations that influence CSR. This exploratory study provides evidence that Institutional Theory demonstrates a feasible explanation of CSR practice in Malaysia.

Board characteristics, ownership structure and earnings quality: Malaysian evidence

Purpose – The relationship between the board characteristics (i.e. board independence, CEO duality, board size, board meeting and board tenure) and the ownership structure (i.e. managerial ownership, family ownership and institutional ownership) and earnings quality is examined. Design/methodology/approach – Data from 280 non-financial companies listed on Bursa Malaysias Main Board for the year 2004 is used. Findings – Significant association was found between board tenure and earnings quality. In addition, a positive significant association was found between outside board ownership and family ownership and earnings quality. However no significant relationship was found between board of directors’ independence and earnings quality. Research limitations/implications – The association between audit committees’ characteristics and earnings quality was not examined. An examination of the impact of ownership structure on boards of directors and audit committees is warranted. An investigation of the impact of the ownership structure on earnings quality in Malaysia using separate test on family-controlled and non-family-controlled firms is suggested. Practical implications – The appropriateness of policy directives requiring majority independent directors may be considered by policy makers. Originality/value – The conflict of interest between outside shareholders and managers in a diffused ownership support the agency theory. However, utility of agency theory to explain the conflicts between the controlling owners and the minority shareholders where ownership concentration is prevalent is limited. Whilst demonstrating the dominant impact of ownership structure on earnings quality in Malaysia the study calls for alternative explanations of corporate governance practices in different institutional settings.

Audit committee experts and earnings quality

Purpose – The purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange Commission requires firms to identify their audit committee financial experts.Design/methodology/approach – Based on two theories, the resource dependence theory and agency theory, the study examines the association of audit committee experts with financial reporting quality, proxied by earnings management. Samples involved 2008 financial data of 300 firms that were ranked by highest market capitalisation. In total, four types of expertise are developed based on academic qualification, professional qualification and work experience.Findings – Presence of non‐accounting experts and accounting experts is significant to reduce the magnitude of earnings management. Other than that, leverage and firms size are also foun...

ACCOUNTING PARADIGM OF LIVED EXPERIENCES IN ACTION RESEARCH: THE CASE OF MALAYSIAN PLANTATION WORKERS

This paper introduces action research as a possible new method to reduce the distance between idealism and accounting practice, thus contributing to the accounting literature. The source of this paper is an on-going large research project. The project has three objectives. Firstly, to provide evidence of the utilisation of accounting methods in the Malaya plantation industry from its earliest beginnings through to the introduction of accounting tools such as budgets, leading to the creation of a social and economic underclass in Malaysia. Secondly, to examine the extent to which accounting information provided in the Annual Reports of Malaysian plantation companies is used in determining the wages of plantation workers on the grounds that workers in the plantation industry have been and still are, among the most poorly paid in Malaysia, and perhaps the world. Interestingly, the wages of plantation workers are determined through a negotiation process between the National Union of Plantation Workers and the Malaysian Agricultural Producers Association. This paper draws from this research project and explicates the utilisation of the Action Research methodology in reporting the “lived experiences” of those affected by Management Accounting budgets and demonstrating how the parties to wage negotiation, the employers, union and employees, can better derive value from accounting information provided within the annual reports of Malaysian plantation companies.

Introduction to Accounting in Asia

Purpose – This paper introduces the special issue on accounting in Asia. It summarises and reflects on themes and findings emerging from the papers in this volume. Design/Methodology/Approach – The findings reported in the paper are based on desk research and review of the papers contained in the volume. Findings – The papers evidence that corporate governance and financial reporting quality are interlinked. Accounting in Asia is preoccupied with the corporate governance–financial reporting quality nexus in the face of convergence with International Financial Reporting Standards (IFRS). Research limitations/Implications – Policy makers in Asian countries need to develop appropriate regulatory mechanisms to address cultural issues, namely, attitudes towards secrecy and fraud, to ensure effective implementation of IFRS. This entails sound grounding in ethics and integrity within the financial reporting stakeholder community. Additionally, unintended consequences of fair value application need to be examined in the Asian context. Originality/Value of paper – This paper is a summary of seven studies in Asia. The studies highlight critical issues emerging from Asias experience with corporate governance reforms and the move to IFRS convergence, and set the agenda for future research in accounting in Asia, specifically, and emerging economies, generally.