2011 Awards for Excellence

Citation

(2012), "2011 Awards for Excellence", Asian Review of Accounting, Vol. 20 No. 1. https://doi.org/10.1108/ara.2012.34120aaa.001

2011 Awards for Excellence

2011 Awards for Excellence

Article Type: 2011 Awards for Excellence From: Asian Review of Accounting, Volume 20, Issue 1.

The following article was selected for this year's Outstanding Paper Award for Asian Review of Accounting

“Corporate governance and earnings forecasts accuracy”

Nurwati A. Ahmad-ZalukiCollege of Business, Universiti Utara Malaysia, Kedah, Malaysia

Wan Nordin Wan-HussinCollege of Business, Universiti Utara Malaysia, Kedah, Malaysia

Purpose – This paper aims to extend the research on the Malaysian initial public offering (IPO) management earnings forecasts by examining the impact of corporate governance mechanisms and earnings forecasts accuracy. It seeks to investigate whether effective corporate governance is a credible signal of improving the quality of financial information.Design/methodology/approach – A sample of 235 IPO companies that went public during the period 1999-2006 was used. Absolute forecast error was used to proxy for earnings forecast accuracy and to represent financial disclosure quality.Findings – Companies with a higher percentage of non-executive directors in the audit committees and larger audit committee size exhibit greater forecast accuracy. The accuracy of IPO earnings forecast is also positively influenced by the use of brand-name auditor.Practical implications – The results suggest that effective corporate governance is a credible signal of improving the quality of financial information. The role of audit committee as financial monitors as suggested by the agency theory supports this paper.Originality/value – The results are consistent with the belief that effective corporate governance is associated with higher financial disclosure quality. The results also support the decisions made by Malaysian regulators such as the Securities Commission to enhance the quality of financial disclosure by revising the Malaysian Code on Corporate Governance to encourage public companies to implement good governance practices such as audit committee independence.

Keywords: Corporate governance, Earnings, Forecasting, Malaysia, Managers

www.emeraldinsight.com/10.1108/13217341011046006

This article originally appeared in Volume 18 Number 1, 2010, pp. 50-67 Asian Review of Accounting

Outstanding Reviewer

Associate Professor Jeffrey Faux