Reversal of impairment losses, firm performance and reporting incentives: Evidence from Malaysia

Malaysian Financial Reporting Standard (FRS) No. 136, Impairment of Assets, was issued in 2005. The standard requires public listed companies to report their non-current assets at no more than their recoverable amount. When the value of impaired assets is recovered, or partly recovered, FRS 136 requires the impairment charges to be reversed to its new recoverable amount. This study tests whether the reversal of impairment losses by Malaysian firms is more closely associated with economic reasons or reporting incentives. The sample of this study consists of 182 public companies listed on Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange) that reported reversals of their impairment charges during the period 2006-2009. These firms are matched with firms which do not reverse impairment on the basis of industrial classification and size. In the year of reversal, this study finds that the reversal firms are more profitable (before reversals) than their matched firms. On average, the Malaysian stock market values the reversals of impairment losses positively. These results suggest that the reversals generally reflect increases in the value of the previously impaired assets. After partitioning firms that are likely to manage earnings and those that are not, this study finds that there are some Malaysian firms which reverse the impairment charges to manage earnings. Their reversals are not value-relevant, and are negatively associated with future firm performance. On the other hand, the reversals of firms which are deemed not to be earnings managers are positively associated with both future firm performance and current stock price performance, and this is the dominant motivation for the reversal of impairment charges in Malaysia. In further analysis, this study provides evidence that the opportunistic reversals are also associated with other earnings management manifestations, namely abnormal working capital accruals and the motivation to avoid earnings declines. In general, the findings suggest that the fair value measurement in impairment standard provides useful information to the users of financial statements

Effects of different cooking methods on isoflavone content in Malaysian soy-based dishes

Soy-based products are one of famous raw ingredients used in the preparation of Asian cuisines. These soy-based products are good source of isoflavones. This study was carried out to observe the effects of different cooking methods on isoflavone content in soy-based products. A total of eight Malaysian dishes prepared using soy-based products with different cooking methods was selected as samples for this study. Daidzein and genestein contents in raw and cooked soy-based products were both quantified using high performance liquid chromatography (HPLC). The results showed that dishes containing tempe as ingredients had significantly higher (p0.05) in this study

The Information and Communication (ICT) Strategic Planning for Perlis State Government

Information and Communication Technology (ICT) is an increasingly powerful tool for improving the delivery of government services, enhancing ICT development opportunities and participating in global markets. Proper planning must be done in order to get a technology plan that can be used to help identify and priorities the applications that are needed for the state. Using the methodology that was published by MAMPU as a guidance for the state government to develop their own Information and Communication (ISP) Strategic Planning, this thesis is to develop an ISP for the Perlis State Government. With the help of this methodology the study focus on identifying the current ICT environment and to propose the new ICT environment to enhancing the usage of ICT technology in order to perform their task in the Perlis State Government Administration. Hopefully this ISP can give a valuable information and as a guidance in ICT development and implementation for the Perlis State Government

Reversals of impairment charges under IAS 36: evidence from Malaysia

We report that firms reversing impairments under IAS 36 are not more incentivized to engage in earnings management and do not actually engage in more earnings management than a control sample matched on size and industry. We observe that reversals are positively associated with stock market valuation changes but not with future operating performance. Bifurcating our reversal firms into earnings managers and other firms, we report that the impairment reversals of the latter are positively associated with future firm performance and current stock market returns, while those of the former are negatively associated with future operating performance and are unrelated to stock valuation. Thus, while on average impairment reversals are undertaken in an unbiased manner, a minority of firms exploit the latitude provided by this fair value accounting standard to manage earnings upward. This research provides useful information to accounting standard setters pertaining to the adoption of fair value accounting methods. It also assists investment analysts by demonstrating how to detect opportunistic reversals of impairments

Impairment of assets disclosure by public listed companies

The main objective of this study is to investigate how Malaysian public companies disclose the information of asset impairment based on newly issued standard FRS 136 2004 Impairment of Assets. The study also tries to identify the demographical characteristics of companies those were affected by the adoption of this standard. 100 companies listed at the main and second board which recogines impairment loss for the year 2003 were selected as our sample and the data were analyzed using descriptive statistics. Our study report that the compliance to the disclosure requirements as per FRS 136 2004 was unsatisfactory, except for two main requirements which were disclosing amount in the income statement and the nature of assets.The study also documented that property, plant and equipment (PPE) represent the highest tendency of non-current assets subjected to impainnent loss. Indeed, the analysis also revealed that companies which poses large amount of PPE recognized high impairment loss than companies carry small size of PPE

Auditor Brand Name and Financial Reporting Fraud of Listed Companies in Nigeria

This paper examines the influence of auditor brand name proxied by the Big4 auditors on financial reporting fraud represented by discretionary accruals (DA). We employ 88 listed companies in Nigeria through 440 firm-year observations for the period of five years from 2012 to 2016. The data for the study are extracted from the annual reports of the listed companies and Thompson Reuters DataStream. We adopt accruals model to proxy for financial reporting fraud. Multiple regression is used to estimate the model of the study. After controlling for monitoring and firm-specific attributes, we find that non-Big4 auditors are more likely to detect financial fraud as they might have more excellent knowledge of local markets and better relations with their clients. Consistent with the resource dependence theory, we find that a high proportion of financial experts on the board reduces the extent of financial reporting fraud, thus leading to better financial reporting quality. The study informs regulators and policymakers on the importance of auditor brand name in curtailing financial reporting fraud in the listed companies of Nigeria. The findings are robust to the alternative estimation. The results contribute to the debate on the role of auditor brand name in curtailing financial reporting fraud

Audit committee attributes and auditor brand name of listed companies in Nigeria

This paper examines the effect of audit committee attributes on auditor brand name proxy by the Big 4. The study utilizes 88 listed firms in Nigeria through 440 firm-year observations ranging between the years 2012 to 2016. The data for the study were extracted from the firms’ annual reports and Thompson Reuters DataStream. A panel logistic regression was employed to estimate the model of the study. Consistent with complementary hypothesis the findings demonstrate that audit committee attributes (audit committee independence, audit committee financial accounting experts, audit committee legal expert, female audit committee member and audit committee stock ownership) are positively related to auditor brand name. The findings also support the substitution hypothesis perspectives by revealing an inverse relationship between audit committee meetings, audit committee tenure, audit committee chair and auditor brand name. Our findings offer an initial insight on the effect of audit committee legal expert, and audit committee stock ownership on auditor brand name. Thus, the findings can benefit existing and prospective shareholders who are the direct users of financial reports. This study can also help policy-makers and regulators by allowing them to better recognize the importance of these distinctive audit committee attributes in enhancing the quality of audits, which is one of the most vital elements of improving financial reporting quality

The Effect Of Corporate Governance Mechanisms On The Valuation Of Comprehensive Income Reporting In Nigeria

This study investigates the influence of corporate governance mechanisms on the valuation of other comprehensive income in Nigeria.The sample of this study consists of 327 firm-year observations comprising of 117 firms listed on the Nigerian Stock Exchange for the period of 2010 to 2014. The findings reveal that there is a positive influence of corporate governance mechanism on the investors’ pricing of other comprehensive income. Findings show that for firms with weak governance mechanisms, other comprehensive income is value relevant, but is more significantly priced for strong governance firms. This study finds a similar result when other comprehensive income interact with individual elements of corporate governance factor.Therefore, corporate governance mitigates reliability concerns associated with fair value earnings, agency cost will be minimised and investors are more likely to view other comprehensive income as more value relevant.It is therefore recommended that reporting entities should pursue best corporate governance practices in order to enhance investors’ confidence in the reliability of other comprehensive income

Effect of audit committee expertise and meeting on earnings quality in Indonesian listed companies: a conceptual approach

Purpose: The purpose of this paper will focus on monitoring and improving corporate governance through earnings quality. In particular, audit committee effectiveness is seen as a significant factor in ensuring effective corporate governance and in view of this, the aim of this paper is to develop a conceptual framework that will examine the impact expertise, meeting and meeting attendance on the earnings quality of companies. Methodology: Future empirical studies could be conducted quantitatively with secondary data. The report from annual reports of companies listed in Indonesia Stock Exchange (IDX) starting from the period of implementation of the new code on implementation guideline in 2013.Implication: In fact, the main issue was centered on financial reporting manipulations and there is need to examine and develop a mechanism that in addition, agency theory is expected to explain the above three factors in providing explanation to accounting information that relates to the earnings quality under study.Finally, it is expected that future empirical studies with this conceptual framework can enhance earnings quality for users of financial statements such as: investors, creditors, shareholders and other stakeholders in Indonesia and beyond

From fawn to deer: Measurement of a biological asset

Every morning Azri uses the same path heading to his office in Universiti Utara Malaysia (UUM). Every time he enters the UUM's entrance, the green scenery and the fresh air of UUM's tropical lush never fail to impress him. The ambience of UUM is so peaceful and calm. UUM is known as the 'University in a Green Forest'. It is watered by two rivers that flow along the middle of the campus. Azri pulled his deepest breath. "Fresh!" he whispered. Moving around the campus, he can see the ostrich, horse, peacock, duck, deer and many more animals that become the main attraction to those who come to UUM. As long as he can remember, these animals are reported as 'living assets'. Mr Azri is the UUM's accountant at Bursar Department, and he started to mainly review these assets after he had been transferred to the Asset Unit as the head of the unit. Not only 'living assets', but this unit was also made responsible to in charge the entire assets in UUM. In terms of reporting, the task of his group is to prepare the financial report of UUM's assets, including the 'living assets'. Suddenly, his tranquillity was disturbed. He remembered the order came by the UUM's Bursar last week, to accurately recognize, measure and disclose the value of 'living assets' according to appropriate accounting standard. All this while, UUM was using Malaysian Private Entities Reporting Standards (MPERS) in reporting and preparing the UUM's financial statements. Recently, the Malaysia Public Sector Accounting Standard (MPSAS) has been urged to be used to replace MPERS in reporting and preparing the UUM's financial statements. Azri thought whether to change the current Standard and if so, how to treat and disclose biological assets under the new accounting Standard