An analysis of financial performance of Malaysian-based multinational enterprises

Multinational enterprises (MNEs) have a major influence on contemporary world trade and business. Their dominance is predicted to grow in the future, as greater convergence and integration is achieved in world economies. Generating evidence that further our understanding of their behaviour is, therefore, considered to be an important research priority. This paper examines various aspects of the reported financial performance of Malaysian-based MNEs with emphasis on profitability. The aim is to provide empirical evidence on the nature and magnitude of their reported profitability. It compares the performances of foreign-controlled firms with those of Malaysian controlled firms, and also examines inter industrial differentials in profitability. Data on sampled firms were collected from their annual reports. Statistical analyses were conducted, on three-year average and annual profitability figures of the firms, using exploratory data analytical (EDA) techniques. Formal non parametric statistical tests were then carried out to establish whether there were differences in the performances of foreign controlled and locally controlled firms. Results indicate significant differences in the average performances reported by different groups of Malaysian based MNEs, both in terms of location of control and industrial affiliation. The findings suggest that MNEs' performances could be explained, using a number of characteristics, such as size, industry and location of control

A self-assessment of entry-level PC skills by newly qualified Irish chartered accountants

This article examines the extent to which Irish university accounting curricula provide the PC skills necessary to prepare graduates for a career in accountancy. The entry-level self-perceived PC skills of accounting/commerce (relevant) degree holders are compared with the entry-level self-perceived PC skills of those holding other qualifications for all newly qualified members of the Institute of Chartered Accountants in Ireland admitted in one year. Significant differences were found between the two groups in almost all of the PC skills identified. The findings revealed that relevant degree-holders were much more PC literate when they commenced professional training than those holding other qualifications. No significant difference in entry-level self-perceived PC skills was discovered between male and female Irish chartered accountants. When the gender analysis was extended to include entrance qualification, the difference between relevant degree holders and those holding other qualifications, discovered in the main analysis, was confirmed within the gender groupings

Differences in the reported performances of foreign-controlled and domestically-controlled firms : some UK evidence

This study provides empirical evidence on the relative performances of Foreign Controlled Domestic Companies operating in the United Kingdom as compared to those of United Kingdom Controlled Domestic Dompanies. One hundred and fifty (150) Foreign Controlled Domestic Companies, selected from the Times 1000 (1995), were matched with 150 United Kingdom Domestic Companies on the bases of size and industry. The reported performance data of the two sub samples for five years were extracted from the FT Extel secured database. Statistical tests were then carried out, on five year average and annual bases, to establish whether there were differences in the performances of the two groups of firms. Results revealed statistically significant differences in the reported performances of Foreign Controlled Domestic Companies and United Kingdom Domestic Companies operating in the United Kingdom over the five year period. Foreign controlled firms significantly under performed United Kingdom Domestic Companies of comparable size and industry. The lower profitability figures reported by these firms were partly as a result of higher trading expenses. The study also found differences in the year to year magnitude of under performance by Foreign Controlled Domestic Companies. While findings in this study corroborate those of earlier United States based studies, the management and owners of Foreign Controlled Domestic Companies’ parents should be interested in the apparent underperformance of their United Kingdom based assets. It is possible, however, that the figures reported do not reflect real asset performance. In which case, the United Kingdom tax authorities may want to take a closer look at Foreign Controlled Domestic Ccompanies’ reported performances to establish whether they are the outcome of income shifting practices. Future studies could examine how the performances of the managers of these foreign located assets are evaluated and rewarded and explore other possible explanatory factors for their reported under performance

Practical PC skills of newly qualified chartered accountants : a study of the training programme of the Institute of Chartered Accountants in Ireland

Substantial literature studied here showed the need for practical personal computing (PC) skills among accounting professionals. However, the effectiveness of PC courses designed to inculate these skills in accountants has not been investigated. This article examines the perceptions of newly qualified members of ICAI on their PC skills prior and post undertaking the Institute's PC skills programme. It finds significant perceived improvement in PC skills after completing the programme. However, notwithstanding this improvement, concern was expressed among newly qualified members that the Institute was not taking advantage of students’ existing PC knowledge and developing more advanced and integrated programmes which are necessary to meet the needs of their work environment and professional careers

Public sector financial disclosure on the Internet : a study of New Zealand local authorities

Some New Zealand local authorities elect to provide financial information on their websites. Literature examining the behaviour of managers in the public sector suggests that agency relationships in the sector motivate such managers to provide information to enable the monitoring of their actions. This literature identifies a number of characteristics and variables that proxy for agency costs in the public sector. The recent development of the Internet provides an opportunity for examining voluntary disclosure in the public sector and, in particular, in the local government environment. This paper examines the voluntary Internet financial reporting practices of local authorities. Five variables associated with voluntary disclosure - size, type of local authority, profitability (surplus), leverage and press visibility - are examined. The results of the univariate analysis indicate that size, council type, and press visibility are associated with local authorities' choice to report financial information on the Internet. However, the results of multivariate analysis indicate that only size and type of council are associated with the quantity and type of financial disclosure on the Internet. Possible limitations of the study and suggestions for future research are discussed in the paper

Audit issues and content analysis of audit practices associated with corporate financial reporting on the Internet

The use of the Internet as a channel for the dissemination of corporate information is a recent and fast growing phenomenon. Indeed, it is likely that it will become the principal medium for the distribution of financial information to users. The use of the Internet for financial reporting creates unique opportunities and challenges for the auditing profession. Notwithstanding the significance and urgency of the related auditing issues, relatively little research has been conducted in this area. This study seeks to identify the key audit implications of Internet financial reporting, based on a comprehensive review of the academic and professional literature, and to obtain empirical evidence concerning the nature and extent of audit-related web practices through a content analysis of New Zealand listed company websites. The literature review highlighted issues relating to the role and responsibility of auditors for information placed on corporate websites; the potential for inappropriate association of the auditor’s report with unaudited information located at the auditee’s website, or information linked to/from external websites, and the inappropriate omission of the auditor’s report from the website; the appropriate audit procedures; and the nature, timing, form, and content of the auditor’s report on the Internet. The results of the content analysis of auditor web-related practices reveal several significant concerns for the auditing profession in relation to the presentation, context, and content of the auditor’s report in a web-based environment. Given the currency and significance of the issues raised in this paper, and the lack of current guidance by accounting professional bodies, the results of this study are likely to be of particular value to practicing accountants, accounting regulators, and accounting research

The efficacy of liquidation and bankruptcy prediction models for assessing going concern

Although previous research generally finds bankruptcy prediction models to outperformauditors' views on going concern, accuracy in identifying failing companies is lower. Recent research questions whether bankruptcy is the best proxy for assessing going concern, since filing for bankruptcy is not synonymous with the invalidity of the going concern assumption. Furthermore, in contrast to debtor oriented countries such as the US, liquidation is the most likely outcome of corporate insolvency in creditor oriented countries such as the UK, Germany, Australia and New Zealand. This suggests that bankruptcy prediction models have limited use for assessing going concern in creditor oriented countries. Previous research hasnot recognised this distinction between corporate bankruptcy and liquidation in developing statistical models as an audit tool for assessing going concern. This study examines the efficacy of a corporate liquidation model and a benchmark bankruptcy prediction model for assessing company liquidation. It finds that the liquidation model is more accurate in predicting company liquidations in comparison with the benchmark bankruptcy prediction model. Most importantly. Type 1 errors for the liquidation prediction model is significantlylower than for the bankruptcy prediction model, which indicates its greater efficacy as an analytical tool for assessing going concern. The results also suggest that bankruptcy prediction models may not be appropriate for assessing going concern in countries where the insolvency code is creditor oriented

Corporate financial reporting : firm characteristics and the use of the Internet as a medium of communication

The development of the Internet as a medium for the dissemination of corporate financial information creates a new reporting environment. Extensive literature examines the extent and determinants of voluntary financial reporting through traditional mediums such as paper based annual reports. This paper extends this literature by examining the extent and determinants of voluntary corporate Internet Financial Reporting (IFR) by New Zealand companies. The results indicate that some determinants of traditional financial reporting such as firm size and spread of shareholding are influential determinants of IFR. However, other characteristics such as liquidity do not significantly explain the choice to use Internet as a medium for corporate financial reporting

International transfer pricing : a survey of practices, tax-audit, and strategies for managing tax uncertainty by foreign owned subsidiaries in New Zealand

International Transfer Pricing (ITP) tax guidelines and regulations have been recentlyintroduced in New Zealand. These guidelines allow a number of transfer pricing methods.This paper examines international transfer pricing practices of New Zealand basedmultinational companies, the likelihood that these companies would experience a tax-audit by the taxation authority, and the mechanisms these companies use to minimize tax uncertainty. The key findings include that tangible goods is the most common intercompany transfers; cost plus method is the most common transfer pricing method; tax audits by Inland Revenue Department (IRD) are positively associated with company size; the greater the volume of its intercompany transfers, the more likely that a company would have an Advance Pricing Agreement(APA)with the IRD or would consider an APA in the future

Online electronic financial reporting : practices and issues

Paper-based hard copy annual reports have been the traditional instrument for the distribution of corporate financial information. The development of the Internet, providing electronic and online reporting, allows for the improvement of corporate communication with shareholders and other stakeholders. It also raises many issues, which challenge regulators and the accounting profession. This paper examines the extent of online financial reporting by New Zealand companies and analyses the content of such reporting with the aim of identifying strengths and weaknesses. Many New Zealand listed companies make use of the web for the dissemination of their financial information, although such usage is relatively lower in comparison with other countries, suggesting that the use of such medium is likely to increase in the future. The quality of display and use of contemporary electronic features are found to be of comparable standard to those of companies in other countries. However, many companies are not utilising the opportunities of the electronic format by merely providing an electronic version of their paper based annual reports. Furthermore, the paper examines the advantages and issues in relation to providing financial information on the Internet. The advantages of online in comparison with hard copy financial reporting include: lower production and distribution costs, flexible access to information, ability to provide relevant information to users, and ability to provide real-time information. The issues associated with online reporting include: blurring the distinction between audited and unaudited information, access is limited to individuals with costly equipment and service and computer skills, and the possible introduction of errors in re keying information. Some of the issues pose a challenge to standard-setters and regulators such as whether all online financial reporting should comply with GAAP, whether all online financial reporting should be audited and if not a disclaimer should be provided, and whether there should be a compulsory filing system for financial reports on a regulator-controlled server to ensure access to the information and its integrity. The paper identifies a number of research opportunities. There is a need to reexamine many of the research issues addressed for hard copy financial reporting under the new reporting medium, such as content, timing and the determinants of voluntary online financial reporting. There are additional research issues that are unique to online reporting, such as, whether online financial reporting enhances the understanding of corporate reporting, and whether users find online reporting an acceptable substitute for hard copy financial reports. Online reporting is likely to extend to real-time financial reporting that provides further research opportunities