Enhancing Financial Reporting Quality through Corporate Ethics Commitment

2021 ◽  
Vol 6 (2) ◽  
pp. 84-94
Author(s):  
Noorul Azwin Md Nasir ◽  
Hafiza Aishah Hashim ◽  
Noorshella Che Nawi ◽  
Mohd Nor Hakimin Yusoff ◽  
Nur Athirah Mohd Aluwi
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Code Of Ethics ◽  
Reporting Quality ◽  
Jel Classification ◽  
Financial Reporting Quality ◽  
Corporate Ethics ◽  
Financial Statement Fraud ◽  
Code Of Corporate Governance

Objective - A rising number of cases involving ethical misconduct within firms have of late received considerable attention in Malaysia. Despite the country's declaring having a strong corporate governance policy, strengthened through the Code of Ethics for Company Directors and Malaysia Code of Corporate Governance, unethical practices, and lack of integrity within firms remain an issue. This paper aims to review the current implementation of corporate ethical conducts among corporate governance practitioners as well as factors that influence corporate ethics commitment in a firm. Methodology/Technique - This paper is developed from extensive readings of previous literature on corporate governance practices and their effect on the quality of financial reports. Findings - This paper discloses collective approaches of corporate ethics practiced in Malaysian firms and how the implementation has enhanced the firms' overall financial reporting quality. It demonstrates current issues and the importance of corporate ethics commitment to enhance financial reporting quality. Firms that emphasize ethical commitments, reduce the risk of financial statement fraud and firms will naturally gain trust from their stakeholders. Novelty - This paper stresses the importance of sound ethical conduct above other factors that influence the financial reporting quality of firms in Malaysia. This paper is the result of extensive research on corporate ethics commitment and financial reporting quality. Type of Paper - Review. Keywords: Corporate Ethics; Corporate Governance; Financial Reporting Quality JEL Classification: G34, M41.

Enhancing Financial Reporting Quality through Corporate Ethics Commitment: A Malaysian Review

2021 ◽  
Vol 12 (1) ◽  
pp. 72-72
Author(s):  
Noorul Azwin Md Nasir ◽  
Hafiza Aishah Hashim ◽  
Noorshella Che Nawi ◽  
Mohd Nor Hakimin Yusoff ◽  
Nur Athirah Mohd Aluwi
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Corporate Culture ◽  
Ethical Issues ◽  
Code Of Ethics ◽  
Reporting Quality ◽  
Warning Signs ◽  
Financial Reporting Quality ◽  
Corporate Ethics ◽  
Ethical Misconduct

A rising number of cases involving ethical misconduct within firms have of late received considerable attention in Malaysia. Despite the country's declaring having a strong corporate governance policy, strengthened through the Code of Ethics for Company Directors and Malaysia Code of Corporate Governance, the unethical practices and lack of integrity within firms remain an issue. PricewaterhouseCoopers (PwC) Malaysia conducted a survey in 2018, it was found that 41 percent of Malaysian registered companies were guilty of committing some forms of economic crimes, specifically business misconduct, asset misappropriation, bribery, and corruption. They added, the actual number may be higher due to many cases of ethical misconduct that typically go unreported. Furthermore, crimes of ethical misconduct in Malaysia have also increased by 28 percent in the last two years. It was revealed taht corporate culture was the most influential element in helping detect early warning signs of ethical misconduct within a firm. A KPMG 2019 report published in the subsequent year also suggested that an unhinged desire for a wealthy lifestyle acts as a prime motivation behind many of the unethical behaviors discovered. Thus, in the light of the increasingly worsening situation of ethical misconduct in Malaysian firms, the need to explore these corporate ethical issues has never become more crucial and appropriate. The ubiquitous nature of the issue has subsequently jeopardized the financial reporting quality of Malaysia's firms. Keywords: Corporate Ethics, Corporate Governance, Earnings Management, Financial Reporting Quality

scholarly journals The effect of governance system and degree of convergence to IFRs on the quality of financial reporting: Evidence from Asia

2015 ◽  
Vol 12 (4) ◽  
pp. 409-423
Author(s):  
Ratna Wardhani ◽  
Sidharta Utama ◽  
Hilda Rossieta
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Reporting Quality ◽  
International Standards ◽  
Financial Reporting Quality ◽  
Governance System ◽  
Governance Practice ◽  
Corporate Governance Practice ◽  
Degree Of Convergence

This research investigates the effect of governance system and degree of convergence to IFRS on financial reporting quality. With sample of Asian countries, this study concludes that country level and firm level governance systems, both at, and the degree of convergence have positive influence on financial reporting quality.The effect of degree of convergence of local GAAP to IFRS and corporate governance practice to financial reporting quality will be stronger for companies in countries with weak investor protection. Also, we find that in company with weak corporate governance practice, the adoption of international standards will increase the quality of financial reporting.The results indicate that the adoption of international accounting standard become more important in the countries and companies with weak governance system.

scholarly journals IFRS compliance, corporate governance and financial reporting quality of GSE-listed non-financial firms

2020 ◽  
Vol 7 (1) ◽  
pp. 1759856
Author(s):  
Deborah Esi Gyanba Mbir ◽  
Otuo Serebour Agyemang ◽  
George Tackie ◽  
Mac Junior Abeka
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Financial Firms

scholarly journals Corporate Governance and Financial Reporting Quality in Selected Nigerian Company

2014 ◽  
Vol 2 (3) ◽  
pp. 7-16
Author(s):  
Onuorah Anastasia Chi-Chi (PhD) ◽  
Imene Oghenefegha Friday
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Audit Committee ◽  
Audit Quality ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Financial Reporting Quality ◽  
Board Structure ◽  
Quality Audit

This paper evaluated the level of performance of some selected companies ranging from commodities, brewery, banking, oil and gas and beverages in terms of corporate governance measure indictors on the firm quality of financial reporting in Nigeria. The data were collected from 2006 to 2015. Econometric analysis were conducted and the result suggests that the correlation among corporate governance indicators of board structure (size-BRDSZ and independence-BRDID), audit quality (audit committee size (ADCMZ), the quality of external audit (EADTQ) as measured by the presence of an auditor among the big-4), board experience (i.e. experience-BRDEX) and financial reporting quality is 93.47%. The independent variables can explain the variation in the FRQDA by 54.29%. There is overall significance among the parameters measuring financial reporting quality as discretionary accruals of firm (FRQDA). Board structure (size-BRDSZ), board experience (experience-BRDEX) and the quality of external audit (EADTQ) have positive impact on the financial reporting quality measured by the discretionary accruals of firm (FRQDA) by 16.01, 0.05 and 2.75. However, independent directors on the board of firm (independence-BRDID) and audit quality (audit committee size (ADCMZ) negatively affect financial reporting quality measured by the discretionary accruals of firm (FRQDA) as much as 0.99 and 20.01. Guarantee Trust Bank Plc. among the five selected companies of study in Nigeria has better performance of financial reporting based on board structure (size-BRDSZ) and audit committee size (ADCMZ). This revealed that there is short run relationship among Audit quality (audit committee size (ADCMZ), and the quality of external audit (EADTQ) as measured by the presence of an auditor among the big-4) and board experience (i.e. experience-BRDEX) have not granger cause FRQDA. It further recommended that greater focus on corporate governance indicators so as to bring about global standard financial reporting in the Nigerian emerging market for investment opportunity.

scholarly journals THE RELATIONSHIP BETWEEN AUDIT COMMITTEE, POLITICAL INFLUENCE AND FINANCIAL REPORTING QUALITY: MALAYSIAN EVIDENCE

2019 ◽  
Vol 18 (2) ◽  
pp. 193
Author(s):  
AZIATUL WAZNAH GHAZALI ◽  
NUR AIMA SHAFIE
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Political Influence ◽  
Business Environment ◽  
Financial Reporting Quality ◽  
Pool Data ◽  
The Relationship

This paper examines the relationship between audit committee, political influence and financial reporting quality of Malaysian listed companies. This study uses pool data consisting of 3,255 firm-year observations listed on the Main Board of Bursa Malaysia from year 2010 to 2014. The findings are robust after controlling for the endogeneity. The current findings indicates that audit committee’s independence and the frequency of audit committee meetings are effective in controlling for both real earnings management and accounting misstatements. Nonetheless, in terms of audit committee size and audit committee’ audit expertise, the relationships are still insignificant. It is important to note that there is some improvement after the corporate governance reforms since studies prior to the reforms found audit committee’s variables are ineffective towards a higher quality of financial reporting. Meanwhile, political influence is still relevant in a Malaysian business environment with regard to financial reporting quality, however, the aggressiveness of the influence may have been diluted by the improvement of recent corporate governance reform.

scholarly journals Does chairman independence matter?

2010 ◽  
Vol 8 (1) ◽  
pp. 108-116
Author(s):  
Hafiza Aishah Hashim ◽  
Susela Devi Suppiah
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Earnings Quality ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Leadership Structure ◽  
Reported Earnings ◽  
The Relationship

This paper examines the relationship between the role of non-executive (independent) chairman and the quality of reported earnings. Recent corporate governance reforms recommend firms to appoint an independent leader to ensure the success of a split leadership structure (The Combined Code on corporate Governance, 2006; Higgs Report, 2003). Research on leadership structure to date has tended to focus solely on role duality and find weak or insignificance relationship between role duality and financial reporting quality. Although separating the roles of the chairman and the CEO seems appropriate, researcher argue that it would not necessarily lead to independence of the board if the chairman is not independent. Consistent with recent recommendations to strengthen board leadership by appointing an independent chair, this study evidences a positive and significant association between non-executive chairman and earnings quality in Malaysia. The study suggests that the non-executive status of the chairman is an important mechanism in enhancing the board‟s independence, thus improving earnings quality.

scholarly journals Ineffective corporate governance: busyness of internal board monitoring committees

2016 ◽  
Vol 13 (3) ◽  
pp. 309-325 ◽  
Author(s):  
Khamis H. Al-Yahyaee ◽  
Ahmed Al-Hadi
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Board Members ◽  
Financial Firms ◽  
Board Monitoring ◽  
Risk Committee

We examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. We argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of financial firms over the period 2007 to 2011 from the Gulf Cooperation Countries (GCC), we find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. Our findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee.

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