PROGRAM AND ABSTRACTSWe are very fortunate to have Y. Bhg Prof. Dr. Mansor H. Ibrahim from the International Centre for Education in Islamic Finance (INCEIF) who has made himself available

CoCIAF 2013

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UNIMAS International Conference on

Contemporary Issues in Accounting and Finance 2013

PROGRAM AND ABSTRACTS

Bridging the Gap between Theory and Practice

11 – 12 April 2013

UNIMAS, Sarawak, Malaysia

Organized by

Faculty of Economics and Business

Universiti Malaysia Sarawak (UNIMAS)

Sarawak, Malaysia

CoCIAF 2013

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TABLE OF CONTENTS Message from the Dean, Faculty of Economics and Business, 3 Universiti Malaysia Sarawak Message from the Conference Organizing Chair

4

Conference Organizing Committee

5

Conference Program Schedule

6

List of Tracks and Chairpersons

7

Profile of Keynote Speaker 8 Sessions 9 Abstracts 13 Acknowledgements 25

CoCIAF 2013

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MESSAGE FROM The Dean, Faculty of Economics and Business, Universiti Malaysia Sarawak

Assalamualaikum warahmatullahi wabarakatuh and Salam Sejahtera

It gives me great pleasure to congratulate the organizers of the inaugural Conference on

Contemporary Issues in Accounting and Finance (CoCIAF) 2013 for their commitment and diligence

to establish a platform for the exchange of ideas, discussion of knowledge and discovery of new

information, for the benefit of academicians and practitioners in accounting, finance and other related

fields.

I believe everyone who is part of this conference shares the goal of researching and understanding

contemporary and cutting edge issues, to be at the forefront of knowledge. Hence, it is my desire to

see this two-day conference establish new networks amongst the participants, and break new ground

in introducing new research agendas for further exploration.

To all participants, I am confident that this conference will succeed in meeting its objectives, given

the illustrious background of our speakers and the rich mix of the audience with diverse experiences

and worldviews.

I wish you all participants a pleasant stay here in Kuching, Sarawak. Do enjoy the warm hospitality

of Sarawakians.

Lastly I would like to express my highest gratitude to the CoCIAF organizer and the Faculty of

Economics and Business for their initiative and commitment in spearheading this conference. To all

participants, thank you for your support and hope we will see you again.

Dr. Mohammad Affendy Arip

Dean


Universiti Malaysia Sarawak

CoCIAF 2013

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MESSAGE FROM The Conference Organizing Chair

I am delighted to welcome to all participants of the UNIMAS International Conference on

Contemporary Issues in Accounting and Finance (CoCIAF 2013) organized by the Faculty of

Economics and Business, Universiti Malaysia Sarawak (UNIMAS).

We are very fortunate to have Y. Bhg Prof. Dr. Mansor H. Ibrahim from the International Centre for

Education in Islamic Finance (INCEIF) who has made himself available to deliver his keynote

address. Undoubtedly, his keynote speech will provide insights and a starting point for a thorough

deliberation of the conference topics.

CoCIAF 2013 papers focus on a range of issues in finance, accounting and other topics related to

business and economics. The theme of the conference is “Bridging the Gap between Theory and

Practice”, and hopefully, this could be achieved through the gathering of academicians, policy

makers and industry players.

On behalf of CoCIAF organizing committee, I would like to extend my heartfelt thanks to the

UNIMAS top management and the management of the Faculty of Economics and Business for their

support and cooperation. My sincere gratitude goes to all the members of the organizing committee,

session chairpersons and paper reviewers for their invaluable contributions.

I sincerely hope that the participants will benefit tremendously from the conference. In addition, I

invite everyone to discover Sarawak’s spectacular culture, biodiversity and natural beauty.

Lastly, we look forward to engaging with all conference participants to produce a deep and thoughtful

discussion that can guide our endeavours.

PROF. DR. ABU HASSAN BIN MD ISA

CoCIAF 2013 Organizing Chair


Universiti Malaysia Sarawak

CoCIAF 2013

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Conference Organizing Committee CoCIAF, 2013

Advisor Dr Mohammad Affendy Arip Dean, Faculty of Economics and Business, Universiti Malaysia Sarawak

Chairman

: Professor Dr Abu Hassan Md Isa

Co-Chairman

Muhammad Abdullah Zaidel

Treasurer : Michael Tinggi Erni Yusnita Yusoff

Secretariat : Sh Sabrina Syed Ali Nurul Izza Abdul Malek Josephine Yau Tan Hwang Norlina Kadri Dayang Fatimah Awang Jaie

Committee : Associate Professor Dr Ricardo Baba Associate Professor Dr Mohamad Jais Dr Daw Tin Hla Sophee Sulong Balia Shaharudin Jakpar Sharon Cheuk Choy Sheung Bakri Abdul Karim John Taskinsoy Salawati Sahari Mizan Morshidi Azean Ahmad Wan Huraizul Wan Halkap Mohd Nasir Dan Abg Eyman Abg Murhassan Emylie Conia Abdul

CoCIAF 2013

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COCIAF 2013 PROGRAM SCHEDULE

11 April (Thursday)

Activities Venue

Lobby Faculty of 0800 - 0900 Registration and Arrival of Participants Economics and

Business

0900 - 1030 Opening Ceremony and Keynote

Address TMM, FEB

1030 - 1045 Refreshment

1045 - 1245 Session I Finance

Conference Room FEB

1245 - 1400 Lunch

1400 - 1545 Session II

Accounting Conference Room FEB

1545 - 1600 Refreshment

1600 - 1730 Session III

Economics/ Management Conference Room FEB

12 April (Friday)

Activities Venue

0900 - 1130 Session IV

Accounting/ Finance Conference Room FEB

1130 - 1400 Lunch

1400-1800 Tour to UNIMAS and Kuching

CoCIAF 2013

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LIST OF TRACKS AND CHAIRPERSONS

Session Track Chairpersons Venue

I Finance

Sophee Sulong Balia Conference Room FEB

II Accounting

Shaharudin Jakpar Conference Room FEB

III Economics/ Management

Ricardo Baba

Conference Room FEB

IV Accounting/ Finance


Conference Room FEB

CoCIAF 2013

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Profile of Keynote Speaker

Mansor H. Ibrahim

Professor, International Centre for Education in Islamic Finance (INCEIF)

Mansor H. Ibrahim is a Professor of Finance and Econometrics at the International Centre for

Education in Islamic Finance (INCEIF), Malaysia. Prior to joining INCEIF, he served the

Department of Economics, Faculty of Economics and Management, Universiti Putra

Malaysia (UPM), a well-known research university in Malaysia, for almost three years (2009-

2011) and the Department of Economics, International Islamic University Malaysia for 12

years (1996-2008). He studied at Washington University where he received his A. B.

(Economics) in 1990, A.M. (Economics) in 1991 and PhD in Economics in 1996. He was the

product of Maahad Muhammadi at the secondary level and KPP/ ITM Indiana University

Program at Associate Degree level. His current research interest is monetary economics,

money and banking, analysis of financial markets and applied econometrics. He has

published numerous articles in both national and international journals.

CoCIAF 2013

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Session I

Finance

Session I (Cont’d)

Finance

Date: 11 April 2013

Time: 1040 - 1245

Venue: Conference Room FEB

Date: 11 April 2013

Time: 1040 - 1245


CHAIRPERSON

Sophee Sulong Balia

SPEAKERS

1. Revisiting the Investment Rate

Kunal S. Khairar, Symbiosis Institute of Business

Management Pune India

Ashok R. Kanetkar, Symbiosis Institute of

Business Management Pune India

Anil S. Kshatriya,, Symbiosis Institute of Business

Management Pune India

2. Corporate Failure Prediction: Empirical Study on

Malaysia Listed Companies

Shaharudin Jakpar, Universiti Malaysia Sarawak

Michael Tinggi, Universiti Malaysia Sarawak

Tiong Wei Hung, Universiti Malaysia Sarawak

3. Predicting Stock Returns with Financial Ratios: A

Case of Banking Sector in Malaysia

Ang Hui Mei, Universiti Malaysia Sarawak

Puah Chin Hong, Universiti Malaysia Sarawak

Mohamad Jais, Universiti Malaysia Sarawak

4. Capital Structure of Property Companies in

Malaysia based on Three Capital Structure

Theories

Salwani Affandi, UiTM Terengganu

Wan Mansor Wan Mahmood, UiTM Terengganu

Nabilah Abdul Shukur, UiTM Terengganu

5. Futures Price and Trading Volume

Bakri Abdul Karim, Universiti Malaysia Sarawak

Zulkefly Abdul Karim, Universiti Kebangsaan

Malaysia

CHAIRPERSON

Sophee Sulong Balia

SPEAKERS

6. Controlling Shareholder and the Implied Cost of

Equity of Malaysian Firms

Swee-Sim Foong, Universiti Sains Malaysia

Chee-Wooi Hooy, Universiti Sains Malaysia

Guat-Khim Hooy, Universiti Sains Malaysia

7. Efficiency Performance of Domestic and Foreign

Islamic Banks in Malaysia

Norlina Kadri, Universiti Malaysia Sarawak

Rossazana Ab- Rahim, Universiti Malaysia Sarawak

Farhana Ismail, Universiti Malaysia Sarawak

CoCIAF 2013

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Session II

Accounting

Session II (Cont’d)

Accounting

Date: 11 April 2013

Time: 1400 - 1545


Date: 11 April 2013

Time: 1400 - 1545


CHAIRPERSON

Shaharudin Jakpar

SPEAKERS

1. Concept and Issues of Hurtt’s Skepticism Model

Towards the Auditors in Malaysia

Sayed Alwee Hussnie Sayed Hussin, Jabatan Audit

Negara Malaysia, Putrajaya

Takiah Mohd. Iskandar, Universiti Kebangsaan

Malaysia

2. The Effect of Effort and Ethical Orientation on Audit

Judgment Performance

Razana Juhaida Johari, UiTM Kelantan

Zuraidah Mohd Sanusi, UiTM Shah Alam

Rashidah Abdul Rahman, UiTM Shah Alam

Normah Omar, UiTM Shah Alam

3. Examining Governance and Accounting Issues in the

Malaysia Church Context: Insight from Literature

and A Proposed Research Agenda

Sharon Cheuk Choy Sheung, Universiti Malaysia

Sarawak

4. An Assessment of Accounting System of Private

Schools in Dutse-Jigawa State

Saifullahi Shehu Ibrahim, Jigawa State Polytechnic,

Dutse

5. Accounting Internationalisation and Corporate

Governance in Non-Financial Sector of Malaysia

Daw Tin Hla, Universiti Malaysia Sarawak

Abu Hassan bin Md Isa, Universiti Malaysia

Sarawak

CHAIRPERSON

Shaharudin Jakpar

SPEAKERS

6. Analysis of Corporate Annual Report Narratives

Sharifah Sabrina Syed Ali, Universiti Malaysia

Sarawak

Sharon Cheuk Choy Sheung, Universiti Malaysia

Sarawak

CoCIAF 2013

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Session III

Economics/ Management

Session III (Cont’d)

Economics/ Management

Date: 11 April 2013

Time: 1600 - 1730


Date: 11 April 2013

Time: 1600 - 1730


CHAIRPERSON

Ricardo Baba

SPEAKERS

1. Testing Rationality of Business Operational

Forecasts in Malaysia Financial Sector

Lucy Lee-Yun, Universiti Malaysia Sarawak

Chin-Hong Puah, Universiti Malaysia Sarawak

Abu Hassan Md. Isa, Universiti Malaysia

Sarawak

2. Strategies for Business Growth: An Analysis of

the Food Processing Industry

Kartinah Ayupp, Universiti Malaysia Sarawak

Rabaah Tudin, Universiti Malaysia Sarawak

3. Causal Analysis on the Relationship between

Agriculture Sector and Economic Growth: The

Case of Malaysia and New Zealand

Nur Zaimah Ubaidillah, Universiti Malaysia

Sarawak

Wan Nur Izni Wan Ahmad Kamar, Universiti

Malaysia Sarawak

4. Stock Market and Aggregate Investment Behavior

in Malaysia: An Empirical Analysis

Mansor H. Ibrahim, INCEIF

Abdillahi Ahmed, Central Queensland University

5. Exchange Market Pressure: Evidence from

Malaysia

Evan Lau, Universiti Malaysia Sarawak

Jenny Yong, Universiti Malaysia Sarawak

CHAIRPERSON

Ricardo Baba

SPEAKERS

6. Thai Demand for Tourism in Malaysia

Fung-Thai Thien, Universiti Malaysia Sarawak

Chin-Hong Puah, Universiti Malaysia Sarawak

Mohd Khairul Hisyam Hassan, Universiti Malaysia

Sarawak

CoCIAF 2013

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Session IV

Accounting/ Finance

Session IV (Cont’d)

Accounting/ Finance

Date: 12 April 2013

Time: 0900 - 1130


Date: 12 April 2013

Time: 0900 - 1130


CHAIRPERSON


SPEAKERS

1. Intellectual Capital and PLS Structural Equation

Modelling: An Application to Banking Sector in

Kelantan Malaysia

Muhammad Khalique Muhd Sadiq, Universiti

Malaysia Sarawak

Abu Hassan Md. Isa, Universiti Malaysia

Sarawak

Suniee Rak , Universiti Malaysia Sarawak

2. Review on the Corporate Governance Attributes

and Voluntary Disclosure Studies

Sim chia Hua, Swinburne University


Muhammad Khalique Muhd Sadiq, Universiti

Malaysia Sarawak

3. Corporate Cash Holding: Evidence from Top

Listed Firms in Malaysia

Nurul Izza Abdul Malek, Universiti Malaysia

Sarawak

Josephine Yau Tan Hwang , Universiti Malaysia

Sarawak

Norlina Kadri, Universiti Malaysia Sarawak

Wong Yee Kiat, Universiti Malaysia Sarawak

4. Independent Directors, Moving Forward in

Exercising Dominant Role: A Case of Malaysian

Firms

Michael Tinggi, Universiti Malaysia Sarawak

Abu Hassan Md Isa , Universiti Malaysia

Sarawak

Shaharudin Jakpar, Universiti Malaysia Sarawak

Sharifah Sabrina Syed Ali, Universiti Malaysia

Sarawak

Salawati Sahari, Universiti Malaysia Sarawak

CHAIRPERSON


SPEAKERS

5. Financial Reporting with IFRS Compliance Practice

and Efficient Capital Market in Bursa Malaysia


Abu Hassan Md Isa, Universiti Malaysia Sarawak

6. Performance Measurement Practices in Developing

Countries: A Review of Literature and Future

Research Direction

Habib Zaman Khan, Macquarie University, Sydney

Maria Dyball, Macquarie University, Sydney

Sujatha Perara¸ Macquarie University, Sydney

7. A Cross Country Study on the Gender Diversity and

Its Effect on Firm Performance

Abduallah Al-Mamun, Universiti Malaysia Sarawak

Harry Entebang, Universiti Malaysia Sarawak

Qaiser Rafique Yasser, Universiti Malaysia

Sarawak

Shazali Abu Mansor, Universiti Malaysia Sarawak

Md. Ashikur Rahman, Multimedia University

8. Dividend Policy and Cash-Flow Volatility – The

Malaysian Experience

Rona Khalili Darman, Universiti Malaysia Sarawak

Mohamad Jais, Universiti Malaysia Sarawak Qaiser

Sophee Sulong Balia, Universiti Malaysia Sarawak

Muhammad Abdullah Zaidel, Universiti Malaysia

Sarawak

CoCIAF 2013

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ABSTRACTS

UNIMAS International Conference on

Contemporary Issues in Accounting and Finance 2013

Bridging the Gap between Theory and Practice

CoCIAF 2013

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SESSION I – FINANCE

Date : 11 April 2013

Time : 1040 – 1245

Venue : Conference Room FEB

REVISITING THE REINVESTMENT RATE

Kunal S. Khairnar

Ashok R. Kanetkar

Anil S. Kshatriya

Two issues have prompted the writing of this paper. One is that, many Corporate Finance textbooks

make a dubious statement about the reinvestment of the cash inflows from a project and the other is

for two mutually exclusive project proposals, NPV and IRR can give conflicting decisions. In one

case of one project, the NPV may be superior while for the other project, the IRR may be superior.

This paper explains how such a situation can be resolved by using what is known as 'Fisher’s rate'.

The assumption regarding the reinvestment rate is fundamental to the discussion about capital

budgeting decisions and recognizing the reinvestment rate in an explicit manner is essential for

appreciating the implications of the NPV/IRR methodology on investment decisions. This paper

explains how investment decisions can be refined using Fisher’s rate and introduces the concept of

‘Modified NPV’ using the Terminal value approach.

CORPORATE FAILURE PREDICTION: EMPIRICAL STUDY ON MALAYSIAN PUBLIC

LISTED COMPANIES

Shaharudin Jakpar

Michael Tinggi

Tiong Wei Hung

The purpose of this study is to investigate the corporate failure prediction between the financial

distress company and financial non-distress company on Malaysia listed companies. This paper

presents empirical results of a study regarding financial ratios as predictors of Malaysian companies

failure. The total sample number of companies used in the study was 42 companies, of which 21

distressed companies and 21 non-distressed companies which were identified from Bursa Malaysia.

Springate step-wise multiple discriminate model was used by the study. The results show that the

financial ratios have a positive relationship towards the prediction of corporate failure except the

Earning before income taxes (EBIT) has a negative relationship to the prediction of corporate failure.

CoCIAF 2013

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PREDICTING STOCK RETURNS WITH FINANCIAL RATIOS: A CASE OF BANKING

SECTOR IN MALAYSIA

Ang Hui Mei

Puah Chin Hong

Mohamad Jais

This study examines whether financial ratios can be used to predict stock returns. Earnings price

ratio, dividend yield and book-to-market ratio are found to be useful in predicting stock returns.

Empirical finding indicates that the market for the banking sector is relatively inefficient and it

gives the arbitrager the oppurtunity to gain advantages through the usage of publicly available

information to predict future stock prices.

CAPITAL STRUCTURE OF PROPERTY COMPANIES IN MALAYSIA BASED ON THREE

CAPITAL STRUCTURE THEORIES

Salwani Affandi

Wan Mansor Wan Mahmood

Nabilah Abdul Shukur

This study examines the capital structure determinants of 54 property companies listed in the Bursa

Malaysia’s property sector. Employing Fixed Effect Estimation model, the empirical results reveal

that the debt-equity structure of the companies is influenced by the various firm-specific attributes and

macro-economic factor. In particular, the evidence shows that property asset intensity and firm size of

these property companies are significant determinants of corporate debt policy. On the other hand,

profitability does not appear to suggest any significant contribution on the capital structure decision of

property companies.

FUTURES PRICE AND TRADING VOLUME

Bakri Abdul Karim

Zulkefly Abdul Karim

This paper examines the long- and short-run dynamic causality between the futures price and trading

volume in Malaysian futures market. The data of futures price, trading volume and spot price are in

daily frequency, spanning from 2006 to 2009. By using ARDL cointegration and VECM causality

tests, the findings revealed that the existence of long-run relationship between futures price, volume

and spot prices. In addition, there exists short-run bidirectional causality relationship running between

futures return-trading volume and futures return-spot return. Thus, the stock index futures market in

Malaysia is not informational efficient.

CoCIAF 2013

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CONTROLLING SHAREHOLDER AND THE IMPLIED COST OF EQUITY OF

MALAYSIAN FIRMS

Swee-Sim Foong

Chee-Wooi Hooy

Guat-Khim Hooy

This study examines the impact of concentration of ownership on implied cost of equity capital of

Malaysian listed firms over 2004-2009. We analyses the impact of higher degree of voting rights by

controlling shareholder, the identity of controlling shareholder, and the moderating effect of

controlling shareholder’s involvement in management. Our result shows that the higher ownership

concentration by controlling shareholder reduces the implied cost of equity capital. The result shows

that foreign firms significantly underperformed against firms controlled by other types of controlling

shareholders, ncluding government and family firms. In addition, we found that involvement in

management can further increases the implied cost of equity capital if foreign controlling shareholder

controlled above 50% of voting rights, while the implied cost of equity capital of family and

government controlled firms is not affected by their presence in company’s top management.

EFFICIENCY PERFORMANCE OF DOMESTIC AND FOREIGN ISLAMIC BANKS IN

MALAYSIA

Norlina Kadri

Rossazana Ab-Rahim

Farhana Ismail

This study examines the efficiency performance of the full-fledged Islamic banks and Islamic

windows in Malaysia for the period of 2006 to 2011. The Malaysian Islamic banking industry has

grown tremendously in terms of assets, deposits and total financing over the study period. Data

Envelopment Analysis is employed in this study to measure the cost efficiency as well as the technical

efficiency and its decompositions. The results show that, on average the main contributor of cost

efficiency for Islamic domestic and foregin banks in Malaysia is allocative efficiency. In addition, the

results find that Islamic foreign banks are more efficient than domestic banks with respect to pure

technical efficiency and allocative efficiency.

CoCIAF 2013

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SESSION II – ACCOUNTING


Time : 1400 – 1545


CONCEPTS AND ISSUES OF HURTT’S SKEPTICISM MODEL

TOWARDS THE AUDITORS IN MALAYSIA

Sayed Alwee Hussnie Sayed Hussin

Takiah Mohd. Iskandar

A need in practicing skepticism attitude is the procedure to be used by the auditor in order to address

fraud. However, there is no evidence to indicate the extent of the skepticism attitude among auditors

because it is difficult to measure (Choo & Tan, 2000). Hurtt (1999: 2007: 2010) has developed

skepticism model based on audit environment in the United States to determine skepticism attitude

with more objective. The question arises how far they might be applied in Malaysia because of

differences in the audit environment. This paper has identified a number of issues or weaknesses.

First, the model is designed on a skeptical individual on a stable basis. Second, the model was

developed with the assumption of interaction among skepticism characteristic does not exist. Third,

factors such as critical thinking abilities (Browne & Kelley, 2007), problem solving abilities and

moral reasoning (Nelson, 2009) are not taken into account in determining its auditor skepticism.

Fourth, the audit work is a team and the influence such as coworkers, supervisors and partners are not

taken into account (Harding & Trotman, 2011). The issues that have been raised require further study

to ensure their suitability for measuring skepticism attitudes among auditors in Malaysia.

THE EFFECT OF EFFORT AND ETHICAL ORIENTATION ON AUDIT JUDGMENT

PERFORMANCE

Razana Juhaida Johari

Zuraidah Mohd Sanusi Rashidah Abdul Rahman

Normah Omar

This study is carried out as to response to the continuity of global corporate failures which has

deteriorated the auditing profession. Auditors’ judgment performances are being questioned and

the public has become less trusting on profession’s ability and willingness in protecting the

interests of investor and stakeholders. There are three objectives addressed in this study with the

first two objectives is to analyze the relationship between effort and personal ethical orientation

on the audit judgment performance. The third objective is to examine the differences in the audit

judgment performance between audit trainees and auditors. A research instrument was developed

and included a set of audit case and Forsyth’s (1980) Ethics Position Questionnaire (EPQ) which

to measure ethical orientation along two dimensions, idealism and relativism. The results show

that there is a significant relationship between the respondent’s effort and audit judgment

performance. On the other hand, this study reveals that the differences in one’s ethical orientation

are insignificant in predicting their judgment in auditing context. Finally, the limitations of the

study are highlighted and future studies are also discussed.

CoCIAF 2013

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EXAMINING GOVERNANCE AND ACCOUNTING ISSUES IN THE MALAYSIA CHURCH

CONTEXT: INSIGHTS FROM LITERATURE AND A PROPOSED RESEARCH AGENDA

Sharon Cheuk Choy Sheung

Governance and accounting in church organizations have been studied since the 1970s. Such

organizations comprised various church denominations and church-related organizations; the main

issues focused on were accounting and accounting practices, the sacred/secular divide and the study of

accounting as a situated practice. Methodologies used in past studies were qualitative in nature and

included case studies, ethnography, interviews and review of archival records. This paper reviews the

relevant literature and identifies existing gaps, taking into account recent cases of fraud and

irregularities that have occurred in church organizations. It then proposes a research agenda for the

study of governance and accounting in church organizations in Malaysia.

AN ASSESSMENT OF ACCOUNTING SYSTEM OF PRIVATE SCHOOLS IN DUTSE-

JIGAWA STATE

Saifullahi Shehu Ibrahim

The aim of this paper is to assess the accounting system in private schools in Dutse, Jigawa State. The

private schools in Dutse, Jigawa State have accountants responsible for the maintenance of all

accounting records and prepare statements of account and that accounting system helps in profit

determination. Thus, accounting system exists in private schools, which helps in ascertaining the

profit and permit effective utilization of available resources, thus, improving the standard and quality

of the teaching. The paper therefore, recommends for the enhancement of accounting system in all

schools thereby convalescing of the entire educational system in the country.

ACCOUNTING INTERNATIONALISATION AND CORPORATE GOVERNANCE IN NON-

FINANCIAL SECTOR OF MALAYSIA

Daw Tin Hla

Abu Hassan bin Md Isa

This study aims to achieve fully compliance with IFRS practice by the firms from non- financial

sector of Malaysia. It analyses the level of financial reporting with IFRS compliance practice by non-

financial companies listed on the main market of Bursa Malaysia. It also analyses the corporate

governance practice and transparency of the companies to determine the IFRS compliance practice by

the firms in Malaysia. Research methodology embodies disclosure analysis based on IFRS

compliance disclosures in annual reports of the firms. Multiple regression model estimates the

instrumental variables of non- financial variables, which are accounted for the financial reporting with

the level of higher IFRS compliance practice by the firms in Malaysia. The Findings of this study

highlight that financial reporting of the firms highly comply with IFRS disclosure requirements in

their annual reports; mean while the level of IFRS compliance is associated with non-financial factors

such as corporate governance and transparent and disclosure practice. This study may contribute as an

evidence of higher IFRS compliance practice by the firms in Malaysia that may contribute achieving

the mission of fully convergence with IFRS in the internationalization of accounting, Malaysia.

CoCIAF 2013

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ANALYSIS OF CORPORATE ANNUAL REPORT NARRATIVES

Sharifah Sabrina Syed Ali

Sharon Cheuk Choy Sheung

The nature of corporate annual reports is changing rapidly. The modern form of corporate annual

reports contain not only independent auditors’ report, the financial statements and notes

accompanying it but there has been a substantial increase in voluntary disclosure narrative provided

by companies annual reports such as interim reports, chairman’s statement, and directors’ report. This

paper explores the narrative disclosures in annual reports and its usefulness as a mode of thinking and

persuading others in the form of stories than numbers (calculation). It attempts to see the used of

narratives as forms of explanation by using content analysis approach. The finding will be benefited

the stakeholders in the decision-usefulness of a range of voluntary disclosure narratives in the annual

report.

SESSION III – ECONOMICS/ MANAGEMENT


Time : 1600 – 1730


TESTING RATIONALITY OF BUSINESS OPERATIONAL FORECASTS IN MALAYSIAN

FINANCIAL SECTOR

Lucy Lee-Yun Chong

Chin-Hong Puah

Abu Hassan Md Isa

The Rational Expectations Hypothesis (REH) states that the actual outcome will be identical to

the optimal forecast when all obtainable information had been utilized in forming the

expectations. This study intends to empirically examine the existence of rational behavior in the

banks and other financial institutions in Malaysia from the perspective of how the decision-

makers formed their gross revenue (GR) and capital expenditure (CE) forecasts. Survey data

provided by the Business Expectations Survey of Limited Companies was utilized to conduct a

series of rationality tests including unbiasedness, non-serially correlated and efficiency tests.

Empirical evidence shows that GR is unbiased, serially uncorrelated and efficient, nevertheless,

CE fails to pass any of the tests. Therefore, GR is deemed as a rational predictor to the actual

value but not in the case of CE.

CoCIAF 2013

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STRATEGIES FOR BUSINESS GROWTH: AN ANALYSIS OF THE FOOD PROCESSING

INDUSTRY

Kartinah Ayupp

Rabaah Tudin

Choosing the correct strategy is crucial for the success of any business ventures, and this is even more

so for small firms that have limited resources. Thus, this study involved empirical analysis of the

growth strategy adopted by firms within the food processing industry which mainly consist of small &

medium sized enterprises. The food industry was selected because of its importance to the Malaysia’s

economy and also because of its dynamic internal and external environment. For instance, in 2011,

processed foods from Malaysia are exported to more than 200 countries, producing an annual export

value of more than RM13billion (Malaysian Investment Development Authority, 2012). A

representative sample consisting of fifteen firms located in Kuching, Sarawak was used for this study.

Results indicated that majority of the firms adopted market penetration strategy due to its perceived

low-risks and ease of implementation that do not overstrain organizational resources. Notwithstanding

the type of strategies adopted, the most crucial success factors was found to be firm’s ability to

respond to market signals, personal networking and systematic operational management of the firm.

CAUSAL ANALYSIS ON THE RELATIONSHIP BETWEEN AGRICULTURE SECTOR

AND ECONOMIC GROWTH: THE CASE OF MALAYSIA AND NEW ZEALAND

Nur Zaimah Ubaidillah

Wan Nur Izni Wan Ahmad Kamar

This study investigates the relationship between agriculture value added and real gross domestic

product for the case of Malaysia and New Zealand. This study employs the annual time series data

from 1977 to 2009. The study also briefly explains the difference in the agriculture policies in both

countries. The methodology of this study adopted the Augmented Dickey Fuller and Dickey-Fuller

unit root tests, Johansen-Juselius cointegration test and Granger Causality test. Results show that there

is no long run relationship for New Zealand and Malaysia. However, it is indicated that there exist a

one-way causality from real gross domestic product to agriculture value added in the case of Malaysia

and two-way causality in the case of New Zealand in the short-run. Hence, the results proved that the

economy for both countries, Malaysia and New Zealand are not dependent on agriculture sector in the

long-run.

CoCIAF 2013

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STOCK MARKET AND AGGREGATE INVESTMENT BEHAVIOR IN MALAYSIA: AN

EMPIRICAL ANALYSIS

Mansor H. Ibrahim

Abdillahi Ahmed

The present paper analyzes the role of stock market, more specifically real stock prices and stock

market uncertainty/volatility, on aggregate investment behavior for an emerging market, Malaysia.

Employing the ARDL approach to cointegration test, the paper establishes a long run equilibrium that

ties the aggregate investment to its determinants – real income, real stock prices, real lending rate and

stock market volatility. In the long run, we document a positive relation between aggregate

investment and real stock prices and a negative relation between aggregate investment and stock

market volatility. These results are further supported by our analyses of their dynamic interactions

based on Granger causality and impulse-response functions. Based on the results, the real stock

market prices, which has yet reached the level recorded prior to the crisis, may have explained the low

investment in Malaysia after the Asian crisis. Moreover, the stock market volatility can also post a

threat to the investment performance.

EXCHANGE MARKET PRESSURE: EVIDENCE FROM MALAYSIA

Evan Lau

Jenny Yong

The purpose of this paper is to empirically investigate the presence of currency crises by adopting the

concept of exchange market pressures (EMP) for Malaysia. We are also interested to show how likely

EMP index is an effective ‘signalling mechanism’ in detecting the extensiveness market pressure of

Ringgit Malaysia against US dollar especially during the 1997 Asian financial crisis and also the 2008

US sub-prime crisis. Our findings confirm several signals of exchange market pressure and its impact

over the sample period. Besides that, the construction of EMP index allows us to witness Malaysia’s

quick recovery from these crises through its policy responses making it more worthy and interesting

study.

THAI DEMAND FOR TOURISM IN MALAYSIA

Fung-Thai Thien

Chin-Hong Puah

Mohd Khairul Hisyam Hassan

Tourism industry is one of the important services industries that plays a crucial role in the

development of Malaysian economy. Thailand has been ranked among the top five tourist

generating countries for Malaysia since last decade. This paper intends to determine factors

affecting Thai tourism demand in Malaysia from the macroeconomic perspective by utilizing

quarterly data from 2000Q1 to 2011Q4. The empirical results indicate that there is a long-run

equilibrium relationship between Thai tourism demand and the specified explanatory variables,

which are Thai real income, real travel cost and exchange rate. Specifically, higher Thai real

income will reduce Thai tourist to Malaysia, while higher real travel cost and stronger currency

attract more Thai visitor to Malaysia.

CoCIAF 2013

22

SESSION IV – ACCOUNTING/ FINANCE


Time : 0900 – 1130


INTELLECTUAL CAPITAL AND PLS STRUCTURAL EQUATION MODELING: AN

APPLICATION TO BANKING SECTOR IN KELANTAN MALAYSIA

Muhammad Khalique Muhd Sadiq

Abu Hassan Md. Isa

Suniee Rak

Intellectual capital is appeared as a prime strategic asset of the organizations in order to get a

competitive edge in a competitive environment. In a competitive environment the role of banking

sector is highly appreciated and acknowledged in the development and growth of national economy. It

is indispensable to find the contribution of intellectual capital in banking sector. Therefore, the main

crux of this study is to predict the influence of intellectual capital on the organizational performance

of banking sector and formulate a model that will help to understand the magnitude of intellectual

capital in this sector. In this study, a total of 250 participants were involved randomly from Kelantan,

Malaysia. Partial least square (PLS) was used to predict the influence of intellectual capital on the

organizational performance of banking sector and construct a Model. The finding shows that the

intellectual capital has positive significant influence on the organizational performance of banking

sector in Kelantan, Malaysia. In addition, the goodness of fit supported the proposed intellectual

capital PLS Model.

REVIEW ON THE CORPORATE GOVERNANCE ATTRIBUTES AND VOLUNTARY

DISCLOSURE STUDIES

Sim Chia Hua

Daw Tin Hla

Muhammad Khalique Muhd Sadiq

This study aims to review the research on corporate governance attributes, and its association to

accounting information disclosure in annual reports. The discussion focuses on attributes of corporate

governance commonly associated with voluntary disclosure and provide a broad overview of their

theoretical relations within the agency theory framework. These governance variables include board

composition, board size, board leadership, ownership structure, family domination on the board, and

existence of audit committee. Overall, evidence concerning the association between voluntary

disclosure and governance is mixed with studies reporting conflicting results. The empirical findings

serves as a foundation on which researchers can build on for further studies in accounting, especially

in Malaysia.

CoCIAF 2013

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CORPORATE CASH HOLDING: EVIDENCE FROM TOP LISTED FIRMS IN MALAYSIA

Nurul Izza Abdul Malek

Josephine Yau Tan Hwang

Norlina Kadri

Wong Yee Kiat

This paper examines the determinants of corporate cash holdings among the Top 100 Malaysian non-

financial firms between 2005 until 2009. Using the 77 Malaysian non-financial firms that listed in

Bursa Malaysia Berhad, there are supportive evidence found that Malaysian firms’ cash holding is

affected by cash flow, capital expenditure, firm size, leverage, and investment opportunities. The

result shows that, firms with high cash flow, low capital expenditure, great investment opportunities,

low leverage, and small firm’s size will lead firm to hold more cash. The evidence in this paper

supported the theory of pecking order, transaction cost model, and agency cost of managerial,

therefore, we can say that Malaysian firms adopted these three theories differently for each variables.

The finding of this paper will benefits related parties regarding investment opportunities, business

planning and development of business

INDEPENDENT DIRECTORS, MOVING FORWARD IN EXERCISING DOMINANT

ROLE: A CASE OF MALAYSIAN FIRMS

Michael Tinggi


Shaharudin Jakpar

Sharifah Sabrina Syed Ali

Salawati Sahari

Engaging independent directors at the board room is nothing new. The unexpected downfall of Enron

and World Com in the 2000 has raised many eyebrows. Tasking internal and external auditors alone

seems no longer sufficient to monitor firms’ daily operating processes, procedural and reporting

compliance and if not address may deteriorate firms performance. The independent directors’

presence at the board level is increasingly and markedly felt. Many firms continue to move forward in

order to make the audience of independent directors more meaningful. The findings from the board

structure exploratory content analysis among an estimated panel of 381 Malaysian firms from period

2001- 2009, seem to suggest that increasing majority of independent directors at board room enable

them to exercise a more dominant role towards profit orientation.

CoCIAF 2013

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FINANCIAL REPORTING WITH IFRS COMPLIANCE PRACTICE AND EFFICIENT

CAPITAL MARKET IN BURSA MALAYSIA

Daw Tin Hla


This study analyses the impact of financial reporting with IFRS compliance practice by non-financial

corporations in equity capital market of Bursa Malaysia. Research methodology embodies content

analysis on annual reports with IFRS compliance by 158 companies. Multiple regression analysis

examines the determinants of accounting quality with the level of higher IFRS in financial reporting.

An event study method investigates whether the firms’ equity stock prices reflect the online annual

report announcements as an impact of informational efficiency in their equity market. The findings of

this study highlights that the firms in Bursa Malaysia comply with higher IFRS in their financial

reporting. The higher IFRS compliance of a firm is associated with the value relevance of the firm.

Additionally, the findings suggest that the level of higher IFRS compliance is associated with an

informational efficiency of equity capital market as an impact of financial reporting online by non-

financial corporations in Bursa Malaysia.

PERFORMANCE MEASUREMENT PRACTICES IN DEVELOPING COUNTRIES:

A REVIEW OF LITERATURE AND FUTURE RESEARCH DIRECTION

Habib Zaman Khan

Maria Dyball

Sujatha Perara

This study analyses 155 papers published by accounting, management, journals between the years

1987 and 2011. The review is organised in relation to research topics, research settings, research

theories, research method and primary data analysis technique. Based on the results of this analysis,

the paper provides reflections on the evolution of emerging countries performance measurement

research over the last 24 years and discusses future research directions.

CoCIAF 2013

25

A CROSS COUNTRY STUDY ON THE GENDER DIVERSITY AND ITS EFFECT ON FIRM

PERFORMANCE

Abduallah Al-Mamun

Harry Entebang

Qaiser Rafique Yasser

Shazali Abu Mansor Md. Ashikur Rahman

Due to increased concern and heavy discussion on female board members in corporation, this study

aims to examine the effect of firm gender diversity on firm performance based on Malaysia and

Pakistani listed companies. Previous studies show that the issue has not been researched in developing

countries compared to developed economies, though the empirical evidences in developed countries

are also not mentionable. The study employs 25 public listed firms from Bursa Malaysia and 30 index

firms from Karachi Stock Exchange starting from 2008 to 2010. In order to examine the effect of

gender diversity on firm performance, the study uses economic value added (EVA) as performance

variable. Thirty seven per cent (37%) listed firms in Pakistan possess women on board while only 7%

firms have female CEO. On the other hand, 56% firms in Malaysia possess female board members

and similar with Pakistan only seven% firms possess female CEO. In accordance with prior empirical

studies from developed countries, results in this study show that there is no significant influence of

female board members on firm performance in Malaysia and Pakistani listed firms.

DIVIDEND POLICY AND CASH-FLOW VOLATILITY – THE MALAYSIAN EXPERIENCE

Rona Khalili Darman

Mohamad Jais

Sophee Sulong Balia


This study investigates the relationship between cash-flow volatiliy and dividend policy of Malaysian

firms for the period of 1999 to 2009. The importance of cash-flow volatility together with other

deteminants of dividends are also investigated.The empirical results show that cash flow volatility and

leverage have significant and negative impact on dividend payments. Further investigation reveals

that dividend paying firms are concentrated on the low level of cash flow volatility group throughout

the years. Dividend payers also facing an increasing cash flow volatility from 2005 to 2009.

ACKNOWLEDGEMENTS

The Faculty of Economics & Business, Universiti Malaysia Sarawak (UNIMAS) wishes to

acknowledge with sincere thanks for individuals and organizations who have contributed directly or

indirectly to the success of this conference.

Documents

PROGRAM AND ABSTRACTSWe are very fortunate to have Y. Bhg Prof. Dr. Mansor H. Ibrahim from the International Centre for Education in Islamic Finance (INCEIF) who has made himself available