The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses
Purpose: This paper aims to examine the impact of disclosure regulation on the levels of bias and accuracy in management earnings forecasts disclosed in the prospectuses of Malaysian initial public offering (IPO). Specifically, the authors investigated the two environments of regulation (mandatory v...
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| Format: | Article |
| Language: | English |
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Emerald Publishing Limited
2017
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| Online Access: | https://repo.uum.edu.my/id/eprint/25807/1/JFRA%2015%201%202017%2059%2077.pdf |
| _version_ | 1803629009018290176 |
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| author | Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin |
| author_facet | Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin |
| author_sort | Ammer, Mohammed Abdullah |
| collection | UUM |
| description | Purpose: This paper aims to examine the impact of disclosure regulation on the levels of bias and accuracy in management earnings forecasts disclosed in the prospectuses of Malaysian initial public offering (IPO). Specifically, the authors investigated the two environments of regulation (mandatory versus voluntary) to draw some conclusions regarding the benefits of regulating disclosure of management earnings forecasts.
Design/methodology/approach: A sample of 111 Malaysian IPOs listing on the Main Market of Bursa Malaysia from January 1, 2004 to February 29, 2012 was used. The paper uses both univariate and multivariate statistical analyses on this sample of IPOs.Findings: The empirical results of these multivariate regressions indicated that disclosure regulation has positive and significant impact on the bias and accuracy of management earnings forecasts disclosed in IPO prospectus. In general, the study results suggest that using disclosure regulation to improve the quality of IPO earnings forecasts can be, to some extent, an effective strategy.
Practical implications
The findings of this study have important implications for regulators and investors. The findings can provide them some relevant insights on the improvements to the earnings forecasts accuracy and trends of the forecast (optimistic or pessimistic) after the change from mandatory to voluntary disclosure. Thus, the authorities may learn whether this change is an effective policy or whether the regime of mandatory disclosure was better for IPO companies and should be reversed.
Originality/value
This study is regarded as the first attempt to investigate the impact of reforms in disclosure regulation on the quality of management earnings forecasts of IPO prospectuses in a developing nation such as Malaysia. In spite of this, the paper focuses on a single country, and it contributes significant insights to the debate about the credibility of IPO management earnings forecasts. |
| first_indexed | 2024-07-04T06:31:02Z |
| format | Article |
| id | uum-25807 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:31:02Z |
| publishDate | 2017 |
| publisher | Emerald Publishing Limited |
| record_format | dspace |
| spelling | uum-258072019-04-01T00:43:55Z https://repo.uum.edu.my/id/eprint/25807/ The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin HD28 Management. Industrial Management Purpose: This paper aims to examine the impact of disclosure regulation on the levels of bias and accuracy in management earnings forecasts disclosed in the prospectuses of Malaysian initial public offering (IPO). Specifically, the authors investigated the two environments of regulation (mandatory versus voluntary) to draw some conclusions regarding the benefits of regulating disclosure of management earnings forecasts. Design/methodology/approach: A sample of 111 Malaysian IPOs listing on the Main Market of Bursa Malaysia from January 1, 2004 to February 29, 2012 was used. The paper uses both univariate and multivariate statistical analyses on this sample of IPOs.Findings: The empirical results of these multivariate regressions indicated that disclosure regulation has positive and significant impact on the bias and accuracy of management earnings forecasts disclosed in IPO prospectus. In general, the study results suggest that using disclosure regulation to improve the quality of IPO earnings forecasts can be, to some extent, an effective strategy. Practical implications The findings of this study have important implications for regulators and investors. The findings can provide them some relevant insights on the improvements to the earnings forecasts accuracy and trends of the forecast (optimistic or pessimistic) after the change from mandatory to voluntary disclosure. Thus, the authorities may learn whether this change is an effective policy or whether the regime of mandatory disclosure was better for IPO companies and should be reversed. Originality/value This study is regarded as the first attempt to investigate the impact of reforms in disclosure regulation on the quality of management earnings forecasts of IPO prospectuses in a developing nation such as Malaysia. In spite of this, the paper focuses on a single country, and it contributes significant insights to the debate about the credibility of IPO management earnings forecasts. Emerald Publishing Limited 2017 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/25807/1/JFRA%2015%201%202017%2059%2077.pdf Ammer, Mohammed Abdullah and Ahmad Zaluki, Nurwati Ashikkin (2017) The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses. Journal of Financial Reporting and Accounting, 15 (1). pp. 59-77. ISSN 1985-2517 http://doi.org/10.1108/JFRA-11-2015-0099 doi:10.1108/JFRA-11-2015-0099 doi:10.1108/JFRA-11-2015-0099 |
| spellingShingle | HD28 Management. Industrial Management Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title | The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title_full | The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title_fullStr | The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title_full_unstemmed | The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title_short | The effect of disclosure regulation on the bias and accuracy of management earnings forecasts in Malaysian IPO prospectuses |
| title_sort | effect of disclosure regulation on the bias and accuracy of management earnings forecasts in malaysian ipo prospectuses |
| topic | HD28 Management. Industrial Management |
| url | https://repo.uum.edu.my/id/eprint/25807/1/JFRA%2015%201%202017%2059%2077.pdf |
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