Wan Nordin Wan-Hussin

Corporate Governance and Earnings Forecasts Accuracy

Purpose - This paper aims to extend the research on the Malaysian initial public offering (IPO) management earnings forecasts by examining the impact of corporate governance mechanisms and earnings forecasts accuracy. It seeks to investigate whether effective corporate governance is a credible signal of improving the quality of financial information. Design/methodology/approach - A sample of 235 IPO companies that went public during the period 1999-2006 was used. Absolute forecast error was used to proxy for earnings forecast accuracy and to represent financial disclosure quality. Findings - Companies with a higher percentage of non-executive directors in the audit committees and larger audit committee size exhibit greater forecast accuracy. The accuracy of IPO earnings forecast is also positively influenced by the use of brand-name auditor. Practical implications - The results suggest that effective corporate governance is a credible signal of improving the quality of financial information. The role of audit committee as financial monitors as suggested by the agency theory supports this paper. Originality/value - The results are consistent with the belief that effective corporate governance is associated with higher financial disclosure quality. The results also support the decisions made by Malaysian regulators such as the Securities Commission to enhance the quality of financial disclosure by revising the Malaysian Code on Corporate Governance to encourage public companies to implement good governance practices such as audit committee independence.

IPO Valuation, Investor Protection and Deregulation: Evidence from Bursa Malaysia

The paper examines (1) the valuation impact of IPO profit guarantee as an investor protection tool, and (2) the structural changes in IPO pricing before and after deregulation in 1996. Based on a sample of 251 IPOs during 1994-2000, the evidence points to the paradoxical role of the IPO profit guarantees. Prior to the Asian financial crisis in the third quarter of 1997, investors are willing to pay more for the IPO shares the more the controlling shareholders guaranteed the forecasted profits. However, in the aftermath of the crisis, IPO profit guarantees no longer affect IPO valuation. Comparing IPO pricing before and after liberalisation, the evidence also lends support to Habib and Ljungqvist (2001) entrepreneurial wealth losses minimisation hypothesis. When IPO entrepreneurs are given the freedom to set the IPO price without interference from the regulator, they factor in their IPO participation ratio in the pricing decision.

CEO characteristics and the amount of capital raised in Malaysian IPOs

This study examines the impact of the characteristics of the Chief Executive Officer (CEO) on the amount of capital raised in the Malaysian Initial Public Offering (IPO) market. To have a broader picture of the impact, the current study employs the Ordinary Least Squares (OLS) and quantile regression techniques, using a sample of 214 IPOs over the period of 2005-2015. The use of the quantile regression technique allows the study to estimate the impact of the CEOs characteristics at different quantiles of the conditional distribution of the capital raised. The results show that companies with a Malay CEO raise more capital than those companies with a non-Malay CEO. In addition, CEO age is significant and negatively associated with capital raised. However, the impact of CEO educational qualification is mixed, while CEO gender is insignificant. Other variables, such as company size and pre-IPO financial health, have significant and positive impact on capital raised. The practical implication of the study is that the characteristics of the CEO play a signalling role in IPO decisions. As such, investors can consider the characteristics of the CEO before making investment decisions.