Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour?
Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analys...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Published: |
Faculty of Business and Accountancy, University of Malaya
2018
|
| Subjects: |
| _version_ | 1825721576657518592 |
|---|---|
| author | Sabrun, Ibrahim Mohd Muhamad, Rusnah Yusoff, Haslinda Darus, Faizah |
| author_facet | Sabrun, Ibrahim Mohd Muhamad, Rusnah Yusoff, Haslinda Darus, Faizah |
| author_sort | Sabrun, Ibrahim Mohd |
| collection | UM |
| description | Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analysed. Design/Methodology/Approach: This study uses the Modified Jones model (Jones, 1991; Dechow, Sloan, & Sweeney, 1996), Roychowdhury’s model (2006) to examine earnings management behaviour of Shariah-compliant companies. Research findings: The results of this study suggest that company’s reputation, financial distress and financial performance are factors that can influence company’s earnings management behaviour and that Shariah values are ineffective in deterring the management from earnings management behaviour. Theoretical contribution/Originality: The findings of this study contribute to the literature by showing that Shariah values may not be beneficial in shaping good business management and reporting practices. Practitioner/Policy implications: The alarming results drawn from this study is a reason for policy setters and relevant accounting bodies to give more emphasis on developing better accounting and reporting policies. Research limitation: This study is limited to non-financial sectors due to measurement limitations. |
| first_indexed | 2024-03-06T05:52:27Z |
| format | Article |
| id | um.eprints-20843 |
| institution | Universiti Malaya |
| last_indexed | 2024-03-06T05:52:27Z |
| publishDate | 2018 |
| publisher | Faculty of Business and Accountancy, University of Malaya |
| record_format | dspace |
| spelling | um.eprints-208432019-04-09T03:11:00Z http://eprints.um.edu.my/20843/ Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? Sabrun, Ibrahim Mohd Muhamad, Rusnah Yusoff, Haslinda Darus, Faizah HF Commerce Business Research aims: This study aims to understand how reputation, financial distress and financial performance influence Shariah-compliant companies into engaging earnings management behaviour. The financial data of 69 FTSE Bursa Malaysia 100 Index companies, dating 2010 to 2014 (five years), were analysed. Design/Methodology/Approach: This study uses the Modified Jones model (Jones, 1991; Dechow, Sloan, & Sweeney, 1996), Roychowdhury’s model (2006) to examine earnings management behaviour of Shariah-compliant companies. Research findings: The results of this study suggest that company’s reputation, financial distress and financial performance are factors that can influence company’s earnings management behaviour and that Shariah values are ineffective in deterring the management from earnings management behaviour. Theoretical contribution/Originality: The findings of this study contribute to the literature by showing that Shariah values may not be beneficial in shaping good business management and reporting practices. Practitioner/Policy implications: The alarming results drawn from this study is a reason for policy setters and relevant accounting bodies to give more emphasis on developing better accounting and reporting policies. Research limitation: This study is limited to non-financial sectors due to measurement limitations. Faculty of Business and Accountancy, University of Malaya 2018 Article PeerReviewed Sabrun, Ibrahim Mohd and Muhamad, Rusnah and Yusoff, Haslinda and Darus, Faizah (2018) Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? Asian Journal of Business and Accounting, 11 (1). pp. 1-36. ISSN 1985-4064, DOI https://doi.org/10.22452/ajba.vol11no1.1 <https://doi.org/10.22452/ajba.vol11no1.1>. https://doi.org/10.22452/ajba.vol11no1.1 doi:10.22452/ajba.vol11no1.1 |
| spellingShingle | HF Commerce Business Sabrun, Ibrahim Mohd Muhamad, Rusnah Yusoff, Haslinda Darus, Faizah Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title | Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title_full | Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title_fullStr | Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title_full_unstemmed | Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title_short | Do Shariah-compliant Companies Engage Lesser Earnings Management Behaviour? |
| title_sort | do shariah compliant companies engage lesser earnings management behaviour |
| topic | HF Commerce Business |
| work_keys_str_mv | AT sabrunibrahimmohd doshariahcompliantcompaniesengagelesserearningsmanagementbehaviour AT muhamadrusnah doshariahcompliantcompaniesengagelesserearningsmanagementbehaviour AT yusoffhaslinda doshariahcompliantcompaniesengagelesserearningsmanagementbehaviour AT darusfaizah doshariahcompliantcompaniesengagelesserearningsmanagementbehaviour |