program and abstractswe are very fortunate to have y. bhg prof. dr. mansor h. ibrahim from the...
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CoCIAF 2013
1
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
Faculty of Economics and Business
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
Faculty of Economics and Business
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
Muhammad Abdullah Zaidel
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
Venue: Conference Room FEB
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
Venue: Conference Room FEB
Date: 11 April 2013
Time: 1400 - 1545
Venue: Conference Room FEB
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
Venue: Conference Room FEB
Date: 11 April 2013
Time: 1600 - 1730
Venue: Conference Room FEB
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
Venue: Conference Room FEB
Date: 12 April 2013
Time: 0900 - 1130
Venue: Conference Room FEB
CHAIRPERSON
Muhammad Abdullah Zaidel
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
Daw Tin Hla, Universiti Malaysia Sarawak
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
Muhammad Abdullah Zaidel
SPEAKERS
5. Financial Reporting with IFRS Compliance Practice
and Efficient Capital Market in Bursa Malaysia
Daw Tin Hla, Universiti Malaysia Sarawak
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
Date : 11 April 2013
Time : 1400 – 1545
Venue : Conference Room FEB
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
Date : 11 April 2013
Time : 1600 – 1730
Venue : Conference Room FEB
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
20
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
21
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.
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SESSION IV – ACCOUNTING/ FINANCE
Date : 12 April 2013
Time : 0900 – 1130
Venue : Conference Room FEB
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
Abu Hassan bin Md Isa
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
Abu Hassan bin Md Isa
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
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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
Muhammad Abdullah Zaidel
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.