After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki
The failure of ENRON and subsequent demise of Arthur Andersen has renewed interest in earnings and audit research. This study examines the impact of ENRON debacle on earnings conservatism in Malaysia. We hypothesised that in the period after ENRON, the auditors and managers of the firms have incenti...
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| Format: | Article |
| Language: | English |
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Universiti Teknologi MARA Cawangan Selangor
2010
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| Online Access: | https://ir.uitm.edu.my/id/eprint/30669/3/30669.pdf |
| _version_ | 1825737231404367872 |
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| author | Abdul Wahab, Effiezal Aswadi Mat Zain, Mazlina Marzuki, Maziana Madah |
| author_facet | Abdul Wahab, Effiezal Aswadi Mat Zain, Mazlina Marzuki, Maziana Madah |
| author_sort | Abdul Wahab, Effiezal Aswadi |
| collection | UITM |
| description | The failure of ENRON and subsequent demise of Arthur Andersen has renewed interest in earnings and audit research. This study examines the impact of ENRON debacle on earnings conservatism in Malaysia. We hypothesised that in the period after ENRON, the auditors and managers of the firms have incentives to report more conservatively to avoid risk of litigation and to protect reputation capital. Based on a sample of 1043 firm-years over the period of 2001 and 2002, we find that, on average, firms do report more conservatively in 2002. In addition, evidence suggests that former Andersen clients report more conservatively in 2002 relatively to non-Andersen clients. Further, we document similar results for firms switching to from another Big 4 to another Big 4 auditing firm in 2002. Finally, we discover firms that did not switch in 2002 do report more conservatively in 2002. We conclude that the ENRON debacle have a profound impact on firms to report more timely earnings. JEL classification: M42 |
| first_indexed | 2024-03-06T02:14:54Z |
| format | Article |
| id | oai:ir.uitm.edu.my:30669 |
| institution | Universiti Teknologi MARA |
| language | English |
| last_indexed | 2024-03-06T02:14:54Z |
| publishDate | 2010 |
| publisher | Universiti Teknologi MARA Cawangan Selangor |
| record_format | dspace |
| spelling | oai:ir.uitm.edu.my:306692022-12-28T07:06:21Z https://ir.uitm.edu.my/id/eprint/30669/ After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki mar Abdul Wahab, Effiezal Aswadi Mat Zain, Mazlina Marzuki, Maziana Madah Financial management. Business finance. Corporation finance Earnings management The failure of ENRON and subsequent demise of Arthur Andersen has renewed interest in earnings and audit research. This study examines the impact of ENRON debacle on earnings conservatism in Malaysia. We hypothesised that in the period after ENRON, the auditors and managers of the firms have incentives to report more conservatively to avoid risk of litigation and to protect reputation capital. Based on a sample of 1043 firm-years over the period of 2001 and 2002, we find that, on average, firms do report more conservatively in 2002. In addition, evidence suggests that former Andersen clients report more conservatively in 2002 relatively to non-Andersen clients. Further, we document similar results for firms switching to from another Big 4 to another Big 4 auditing firm in 2002. Finally, we discover firms that did not switch in 2002 do report more conservatively in 2002. We conclude that the ENRON debacle have a profound impact on firms to report more timely earnings. JEL classification: M42 Universiti Teknologi MARA Cawangan Selangor 2010-06 Article PeerReviewed text en https://ir.uitm.edu.my/id/eprint/30669/3/30669.pdf After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki. (2010) Management Accounting Review <https://ir.uitm.edu.my/view/publication/Management_Accounting_Review/>, 9 (1). pp. 1-23. ISSN 1675-4077 http://arionline.uitm.edu.my/ojs/index.php/MAR/article/view/249 |
| spellingShingle | Financial management. Business finance. Corporation finance Earnings management Abdul Wahab, Effiezal Aswadi Mat Zain, Mazlina Marzuki, Maziana Madah After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title | After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title_full | After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title_fullStr | After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title_full_unstemmed | After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title_short | After ENRON: empirical examination on earnings conservatism in Malaysia / Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Maziana Madah Marzuki |
| title_sort | after enron empirical examination on earnings conservatism in malaysia effiezal aswadi abdul wahab mazlina mat zain and maziana madah marzuki |
| topic | Financial management. Business finance. Corporation finance Earnings management |
| url | https://ir.uitm.edu.my/id/eprint/30669/3/30669.pdf |
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