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Culture, corporate governance and analysts forecast in Malaysia

Effiezal Aswadi Abdul Wahab (School of Accounting, Curtin University, Bentley, Australia)
Anwar Allah Pitchay (Graduate School of Busines, Universiti Sains Malaysia, Pulau Pinang, Malaysia)
Ruhani Ali (Graduate School of Busines, Universiti Sains Malaysia, Pulau Pinang, Malaysia)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 7 September 2015

2263

Abstract

Purpose

The purpose of this paper is to examine the relationship between Bumiputra (in reference to Malay indigenous race) directors, a proxy for culture and analysts forecast. In addition, the study investigates whether corporate governance affects that relationship.

Design/methodology/approach

The sample of this study is based on 664 firm-year observations from 193 firms during the 1999-2009 periods. The authors employ a panel least square regression with both period and industry fixed effects. The authors retrieved of analyst data from the Institutional Broker Estimate System (I/B/E/S) database while the authors hand collected the corporate governance variables. The remaining data were collected from Compustat Global.

Findings

The authors find a positive relationship between the proxy of culture, Bumiputra directors and analysts forecast error suggesting that cultural values influences the level of information in the Malaysian capital market.

Research limitations/implications

The research is dependent on the data availability from I/B/E/S database.

Originality/value

The authors extend the work of Haniffa and Cooke (2002) in investigating how cultural values influence the capital market. In addition, this is the first study that investigates culture values and the analysts forecast.

Keywords

Acknowledgements

The authors would like to acknowledge partial financial support for this research from the Short Term Grant of Universiti Sains Malaysia (304/PPAMC/6310036). In addition the authors would like to thank Janice How and Peter Verhoeven (Queensland University of Technology) for some useful insights.

Citation

Abdul Wahab, E.A., Allah Pitchay, A. and Ali, R. (2015), "Culture, corporate governance and analysts forecast in Malaysia", Asian Review of Accounting, Vol. 23 No. 3, pp. 232-255. https://doi.org/10.1108/ARA-03-2014-0033

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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