Asian Journal of Accounting Perspectives

CEO Power on Earnings Management and the Role of Earnings Targets: A Proposed Research Framework

2024-10-30T14:42:45+08:00

Research aim: This paper aims to present a conceptual framework for CEOs that abuse their power to manage earnings, and the pressure of attaining earnings targets moderating the effect of this power abuse on earnings management (EM).
Design/ Methodology/ Approach: To develop the proposed conceptual framework, this study performed a comprehensive literature review consisting of theoretical discussions and comparative arguments. The development of the framework also involved analysing and summarising the contributions, limitations, and suggestions from previous studies. Following this approach, the conceptual framework was built addressing issues related to CEO power, EM, and earnings targets.
Research finding: Based on the propositions, the proposed research framework expects a significant positive effect of CEO power on EM, and that the pressure of attaining earnings targets will significantly moderate the CEO power and EM nexus among Malaysian listed firms. Malaysian CEOs with more power are expected to manage earnings more easily, and the pressure of attaining earnings targets is expected to influence powerful CEOs to manage earnings.
Theoretical contribution/ Originality: The proposed conceptual framework adds new perspectives to the existing literature by explaining the linkages between CEO power, earnings targets, and EM based on agency theory and upper echelons theory. Moreover, the harmonisation between the Type I agency problem and upper echelons theory is a novel contribution. The framework highlights the influence of the pressure of earnings targets on powerful CEOs’ EM practices. Moreover, two conditions for considering the effect of earnings targets are proposed.
Practitioner/ Policy implication: Malaysian audit firms and listed companies can shape their accounting and monitoring strategies based on the eight formulated propositions. Moreover, this paper will also enable Malaysian regulators and standard setters to revise the existing Malaysian Code on Corporate Governance (MCCG).
Research limitation: This is only a conceptual paper that requires an empirical study with quantitative data to test the propositions and validate the proposed conceptual framework. Hence, the anticipated practical implications are subjected to future empirical validation.
Keywords: CEO power, Earnings management, Earnings target, Agency theory, Upper echelons theory
Type of article: Conceptual paper
JEL Classification: M12, M41

Women on Board: The Impact on Financial Performance of Companies Listed on Bursa Malaysia

2024-10-30T14:54:39+08:00

Research aim: This study aims to investigate the link between women representation as board members and Bursa Malaysia-listed companies’ financial performance.
Design/ Methodology/ Approach: Data was obtained from the Bursa Malaysia website on the 100 leading public listed companies (PLCs). The data covers the period between 2016 and 2018. The association between the dependent and independent variables was evaluated using panel data regression analyses.
Research finding: The findings indicate a negative association between the representation of women on directorial boards and firm financial performance. Conversely, positive associations were found between women on audit committees and firm performance, and when women serve as CEOs or board chairpersons. The study also finds that women directors with accounting and finance backgrounds, as well as their age, tenure, and independence have no significant association with firm performance.
Theoretical contribution/ Originality: The main academic contribution this study makes is evidence that women on boards was an influential factor after 2016; by this year, Malaysian listed companies were to have implemented this policy effectively.
Practitioner/ Policy implication: The results of the study showed that firm performance may be enhanced when women fill positions on audit committees or as CEOs or chairpersons. This may motivate listed firms in Malaysia to appoint more qualified women as members of the boards not only to adhere to the government policy, but also to benefit in terms of financial performance.
Research limitation: The study only examines the top 100 PLCs, which may affect the generalisation of the results. Second, the research only covered the years 2016 to 2018, so the study might not fully illustrate the actual long-term impact that women directorial board members have on firm performance. Furthermore, this paper does not examine the critical mass of women directors in depth, although the amount of women board members needed to have a major effect will be determined by this.

Drivers Affecting Internal Audit Consulting Services: Contrasting Views from Demand-Side and Supply-Side Perspectives

2024-10-30T14:59:59+08:00

demand-side (external auditors and audit committees) and supply-side (chief audit executive and senior and middle-level internal auditors) perspectives on the drivers of internal auditor consulting services.
Design/ Methodology/ Approach: An independent sample t-test was conducted using the SPSS to determine views on the differences between the two groups. The study collected the perceptions of 258 respondents, including 123 on the demand side (57 audit committee members and 66 external auditors) and 135 respondents on the supply side (60 heads of internal audit and 75 internal auditors).
Research finding: On the demand side, there are significant differences in the perceptions of audit committee members and external auditors, except on senior management support, risk-based internal audits, and auditor skills and competencies. On the supply side, there are no significant differences between chief audit executives and internal auditors’ views, except on organisational culture and data analytics.
Theoretical contribution/ Originality: This study extends internal audit research based on the resource-based view (RBV) theory, considering various influencing drivers (internal resources) from the perspectives of various stakeholders that affect internal auditors consulting services.
Practitioner/ Policy implication: To improve the consulting services of the internal auditors, audit committees, external auditors, chief audit executives and internal auditors should develop an understanding of these conflicting views.
Research limitation: Only listed companies in Bangladesh, which are better governed and regulated, were considered for data collection. Future research can focus on other developing countries and on unlisted companies. In addition, perceptions of other stakeholders, such as regulators and senior management, can also be taken into consideration.

Bibliometric Review: Current Trends and Future Direction of Public Sector Budgeting

2024-10-30T15:07:17+08:00

Research aim: This study conducts a bibliometric analysis to delve into the current state and future direction of public sector budgeting globally by scrutinising the overall publishing patterns and knowledge landscape surrounding the evolution of public sector budgeting research.
Design/ Methodology/ Approach: A bibliometric analysis technique was employed to study the development of scientific publications about public sector budgeting. The Scopus database was selected as the main database, and all the data were collected as of November 3, 2023. The first stage involved identifying all relevant documents from the Scopus database. Inclusion and exclusion criteria resulted in a total of 1,925 documents within the period between 1913 to November 3, 2023. The bibliometric analysis of public sector budgeting yielded significant insights into publication patterns, influential literature, notable authors, highly referenced works, and prevalent themes within this domain.
Research finding: This analysis reveals a consistent growth in published material over time, with the United States emerging as the primary contributor in terms of volume. Distinguished scholars like Hou Yilin and Richard J. Cebula have made substantial impact, garnering noteworthy citations for their contributions. Moreover, the review outlines prominent themes in public sector budgeting, underscoring the multifaceted nature of research within this crucial area.
Practitioner/ Policy implication: The study findings offer valuable perspectives for researchers, practitioners, and policymakers, enhancing comprehension of the challenges and prospects in public sector budgeting. Furthermore, longitudinal studies tracking the evolution of themes and trends in public sector budgeting over time could offer valuable insights into the changing landscape of budgetary practices in the public sector. Additionally, comparative studies across different countries and regions could provide a more nuanced understanding of the diverse approaches to public sector budgeting and the factors influencing budgetary practices in various contexts.
Research limitation: The analysis was based on a specific set of data from the Scopus database, and therefore, might not capture all publications in the field of public sector budgeting. Additionally, the review focuses on quantitative analysis of publication trends and citations; thus, the qualitative aspects of the included works are not fully explored. Furthermore, the study is limited to the available data and might not encompass the most recent publications in the field.