Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies
Managerial opportunism, such as earnings management, is a rampant, but often discreet, among certain managers. Agency theory and the notion of conflict of interest are used as bases to assume that managers would resolve to engage with inappropriate activities for their personal benefits. Disto...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | Arabic |
| Published: |
Universiti Sultan Azlan Shah
2018-01-01
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| Series: | Global Journal Al-Thaqafah |
| Subjects: | |
| Online Access: | http://www.gjat.my/gjat2018si/SI2018-07.pdf |
| _version_ | 1817976188111421440 |
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| author | Aziatul Waznah Ghazali Mohd Taufik Mohd Suffian Zuraidah Mohd Sanusi Fahdah Sultan Alsudairi |
| author_facet | Aziatul Waznah Ghazali Mohd Taufik Mohd Suffian Zuraidah Mohd Sanusi Fahdah Sultan Alsudairi |
| author_sort | Aziatul Waznah Ghazali |
| collection | DOAJ |
| description | Managerial opportunism, such as earnings
management, is a rampant, but often discreet,
among certain managers. Agency theory and
the notion of conflict of interest are used as
bases to assume that managers would resolve
to engage with inappropriate activities for their
personal benefits. Distortion of earnings would
erode investor confidence and is detrimental to
the capital market. The Islamic capital market
with Shariah-compliant firms is expected not to
engage in activities that go against the religion
code of conduct. The main purpose of this study
is to investigate managerial opportunism among
Shariah-compliant companies, specifically the
relationship between real earnings management
and the risk of financial distress, leverage, and
free cash flow. This study employs 4,115 data
from 694 sample companies for five years
(2009–2013). Findings conclude that the risk
of financial distress, leverage, and free cash flow
have a significant relationship with earnings
management among Shariah-compliant
companies. This study provides evidence that
further improvements on corporate governance
are necessary to ensure that Shariah-compliant
companies adhere with the Shariah requirement. |
| first_indexed | 2024-04-13T21:59:15Z |
| format | Article |
| id | doaj.art-6981bf5664e54324a1fe3c812dbb4126 |
| institution | Directory Open Access Journal |
| issn | 2232-0474 2232-0482 |
| language | Arabic |
| last_indexed | 2024-04-13T21:59:15Z |
| publishDate | 2018-01-01 |
| publisher | Universiti Sultan Azlan Shah |
| record_format | Article |
| series | Global Journal Al-Thaqafah |
| spelling | doaj.art-6981bf5664e54324a1fe3c812dbb41262022-12-22T02:28:09ZaraUniversiti Sultan Azlan ShahGlobal Journal Al-Thaqafah2232-04742232-04822018-01-01819911510.7187/GJATSI2018-07Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant CompaniesAziatul Waznah Ghazali0Mohd Taufik Mohd Suffian1Zuraidah Mohd Sanusi2Fahdah Sultan Alsudairi3Kingston University London, LondonUniversiti Teknologi MARA, MalaysiaUniversiti Teknologi MARA, MalaysiaKing Abdul Aziz University, Saudi ArabiaManagerial opportunism, such as earnings management, is a rampant, but often discreet, among certain managers. Agency theory and the notion of conflict of interest are used as bases to assume that managers would resolve to engage with inappropriate activities for their personal benefits. Distortion of earnings would erode investor confidence and is detrimental to the capital market. The Islamic capital market with Shariah-compliant firms is expected not to engage in activities that go against the religion code of conduct. The main purpose of this study is to investigate managerial opportunism among Shariah-compliant companies, specifically the relationship between real earnings management and the risk of financial distress, leverage, and free cash flow. This study employs 4,115 data from 694 sample companies for five years (2009–2013). Findings conclude that the risk of financial distress, leverage, and free cash flow have a significant relationship with earnings management among Shariah-compliant companies. This study provides evidence that further improvements on corporate governance are necessary to ensure that Shariah-compliant companies adhere with the Shariah requirement.http://www.gjat.my/gjat2018si/SI2018-07.pdfManagerial OpportunismReal Earnings ManagementShariah-compliant CompaniesFree Cash FlowFinancial Distress |
| spellingShingle | Aziatul Waznah Ghazali Mohd Taufik Mohd Suffian Zuraidah Mohd Sanusi Fahdah Sultan Alsudairi Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies Global Journal Al-Thaqafah Managerial Opportunism Real Earnings Management Shariah-compliant Companies Free Cash Flow Financial Distress |
| title | Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies |
| title_full | Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies |
| title_fullStr | Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies |
| title_full_unstemmed | Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies |
| title_short | Managerial Opportunism: Monitoring Financial Risk of Malaysian Shariah-compliant Companies |
| title_sort | managerial opportunism monitoring financial risk of malaysian shariah compliant companies |
| topic | Managerial Opportunism Real Earnings Management Shariah-compliant Companies Free Cash Flow Financial Distress |
| url | http://www.gjat.my/gjat2018si/SI2018-07.pdf |
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