Generally, financial reporting ought to convey a true and fair view of a firm's financial performance and business performance, but this is not always the case. Inevitably, earnings being among the measure of operational performance of a company is often subjected to the threat of managerial opportunism which would results in financial misreporting. Therefore, corporations, globally, are starting to response to the threat of managerial opportunism with intense internal corporate governance mechanisms. However, improvements of governance framework and accounting standards in recent years have in turn creates other methods of accounting manipulation. More and more firms are shifting from accrual earnings management (AEM) to real earnings management (REM). Compared to AEM, REM involves manipulating the timing or structuring of real business transactions, making it more strenuous to detect. It is also posited that REM would usually occurs before AEM. Due to differences between both AEM and REM, the impact of corporate governance may also differ. Existing corporate governance framework may not be as effective as it should be, and requires a re-examination.
Therefore, the current study considers the role of political influence and corporate governance in influencing the financial reporting quality of Malaysian listed firms. In the institutional settings of an emerging economy such as Malaysia, political connections is a dilemma that plagued the business environment. Malaysia provide a unique landscape for this study as it is a multi-racial country. Moreover, Malaysia represent a postcolonial country with a capital market that is characterized by substantial family ownership and significant political influence and governmental supervision. Primarily, the study examines the relationship between corporate governance mechanisms, political influence and financial reporting quality among Malaysian listed firms based on 643 firms continuously listed from 2010 to 2104. The current study is divided into two parts; the first part of the study focuses on the probable determinants for the occurrences of REM. Meanwhile, the second part of the study addresses the consequence of earnings management which is the accounting misstatement (AM). Additionally, this study also seeks to examine the moderating effect of political influence, including the Bumiputera policy, towards the financial reporting quality.
My work focuses on the area of financial misreporting extending to other issues such as corporate governance, financial reporting quality, auditing, business ethics and related areas. Apart from being a full-PhD student, I am also a research associate at the Accounting Research Institute (ARI). Before pursuing my PhD study, I was an accounting lecturer at Universiti Teknologi MARA (UiTM), Malaysia.