Asian Journal of Business and Accounting

Editors Note

2024-12-26T09:36:09+08:00

Investigating Earnings Management on the Readability of Financially Troubled Indian Firms

2024-12-26T09:39:19+08:00

Manuscript type: Research paper
Research aims: The present study explores the impact of earnings
management and ownership concentration on readability of annual
reports of the financial statement of distressed Indian firms.
Design/Methodology/Approach: The study uses multiple regression for
analysis on a sample of 545 Management Discussion and Analysis sections
of the annual report of 208 Indian financially distressed publicly traded
firms for the period 2014 - 2021.
Research findings: The present study reports that highly distressed Indian
firms produce less readable financial disclosure.
Theoretical contribution/Originality: To the best of the authors’
knowledge, this is the first study to examine the effect of earnings
management and ownership pattern on the readability of financial
disclosures of financially distressed Indian firms.
Practitioner/Policy implication: The findings of the study have significant
implications for investors, regulators and policymakers.

Women Directors’ Specific Attributes and Company Performance: Insights from a Mixed Method Study in Malaysia

2024-12-26T09:43:20+08:00

Manuscript type: Research paper

Research aims: Drawing on resource dependence and human capital theory, this study aims to analyse the relationship between specific attributes of women directors on company performance, specifically on the market performance proxied by Tobin’s Q.

Design/Methodology/Approach: Data for the analysis are extracted from the Top 100 Malaysian companies listed in the Minority Shareholders Watch Group’s Corporate Governance Scorecard from 2018-2021. This is supported by data from interviews with the board of directors and top management to understand the impact of gender diversity on the company’s performance.

Research findings: The findings suggest that the diversity of ethnicity and competency among women directors positively and significantly affects Tobin’s Q. Additionally, the results demonstrate that the proportion of women directors and Blau’s gender diversity show no impact on the market valuation. Moreover, this study also explores whether the COVID-19 pandemic and types of directorships have effects on gender diversity and company performance nexus.

Theoretical contribution/Originality: This current study’s findings enrich the literature by outlining the importance of having diverse attributes among women directors. Unlike many previous studies, this study incorporates both quantitative and qualitative approaches, derived from several interview sessions with key industry players, to enrich the limited quantitative findings.

Practitioner/Policy implication: The findings led to policy recommendations for key stakeholders, suggesting that regulators should encourage companies to focus on the qualities rather than just the numbers when appointing women directors. Policy recommendations

on extending training to the senior management level and reviewing the number of years and directorships may be used to provide a roadmap for regulators, policymakers and companies to better meet the national agenda on women directors’ appointments. This approach could also benefit male directors and enhance overall board dynamics, ultimately advancing the national agenda for gender diversity.

Research limitation: Future studies may consider other attributes among women directors, such as age, experience, expertise and political ideologies. In addition, other theories, like the upper echelon and legitimacy theories, could be integrated into understanding the role of board diversity in affecting company performance.

The Impact of Pandemics on External Audit Practices

2024-12-26T10:00:48+08:00

Manuscript type: Research paper

Research aims: This paper investigates the extent and determinants of pandemics such as COVID-19 on external auditing practices in the United Arab Emirates (UAE) emerging market.

Design/Methodology/Approach: An explanatory study was conducted using the deductive research approach. This paper uses the multiple regression analysis model (OLS) to analyse the survey questionnaire posted to several accountants and auditors. This paper utilizes the foundations of the Contingency Theory to support the study hypotheses.

Research findings: The findings shows that there is neutral relationship between the COVID-19 pandemic and the external auditing practices in the UAE emerging market. More specifically, respondents show moderate perceptions on the negative impact of COVID-19 on auditing performance, functions and skills. The most important determinants of auditing practices risk include firm size, respondents’ job rank, education and gender.

Theoretical contribution/Originality: This paper adds to existing literature the impact of the COVID-19 pandemic on external auditing performance, functions and skills in an emerging market such as the UAE. In addition, it highlights most important determinants of the relationship between the COVID-19 pandemic and the auditing practices.

Practitioner/Policy implication: This paper improves auditing performance by focusing on appropriate policies to improve audit evidence for the required standards during pandemics.

Research limitations/Implications: The study is limited to a single emerging market. Future studies can increase the sample size and conduct triangulation research methodology to enrich the research findings.

Does Tax Policy Change Affect Tax Avoidance Behaviour? Evidence from the Thin Capitalisation Rule in Indonesia

2024-12-26T10:12:26+08:00

Manuscript type: Research paper

Research aims: This research endeavours to assess the extent to which corporations modify their tax avoidance strategies following the initiation of a new anti-tax avoidance policy. Concentrating on the enforcement of the thin capitalisation rule in Indonesia, this study scrutinises whether the introduction of the new policy induces changes in firms’ tax avoidance practice, measured by conforming and nonconforming tax avoidance.

Design/Methodology/Approach: Drawing on financial data from publicly traded companies in Indonesia, spanning the years 2012-2019, a Difference-in-Differences (DID) method is employed to disentangle the impact of thin capitalisation rule on corporate tax avoidance behaviour from extraneous factors. In setting up the DID method, we separate the study period into pre- and post- implementation of thin capitalization rule. We also separate our sample into high-debt firms and lower-debt firms. We apply a two-way fixed effect and the Driscol-Kraay standard errors to ensure the robustness of our analysis.

Research findings: Our findings reveal that the implementation of the new tax rule, which limits company’s debt, is associated with a decrease in conforming tax avoidance. Notably, multinational corporations exhibit a decrease in conforming tax avoidance but simultaneously exhibit an increase in nonconforming tax avoidance. These outcomes suggest that the introduction of a novel tax rule designed to curtail tax avoidance may lead to an upswing in overall tax avoidance behaviour and firms may adjust to a more aggressive approach. Our findings align with prior studies suggesting that companies consistently adapt and tailor their strategies to prevailing conditions to achieve an optimal level of tax avoidance.

Research limitation/Implications: As governments in emerging economies endeavour to promulgate new tax policies aimed at curtailing tax avoidance practices, our study underscores the potential futility of singular policy focus, as corporations may adeptly adjust their approaches to attain an optimal level of tax avoidance.

Originality: The introduction of the thin capitalisation rule in Indonesia provides a unique opportunity to implement quasi experimental method to test whether a stricter anti-avoidance rule effectively curtails firms' aggressive tax avoidance behaviour. Additionally, we utilise the two distinct types of tax avoidance, conforming and nonconforming tax avoidance. This nuanced classification enables a more detailed analysis of the shifts in tax avoidance behaviour following changes in tax policy

An Empirical Exploration of Psychological Well-Being’s Mediating Influence on Work-Life Balance and Employee Performance in Ghanaian Public Hospitals

2024-12-26T10:26:31+08:00

Manuscript type: Research paper

Research aims: This study examines how psychological well-being mediates work-life balance and employee performance in Ghana’s public hospitals.

Design/Methodology/Approach: The Study used a quantitative design. In AMOS version 23, structural equation modelling was used to analyse the data obtained from 350 participants through a simple random technique.

Research findings: This study shows that work-life balance has a strong positive correlation between psychological well-being and employee performance. The study also finds a considerable positive association between psychological well-being and worker performance, and more importantly, the results showed psychological well-being as a mediator in the relationship between work-life balance and employee performance.

Theoretical contribution: Empirical evidence supports the Conservation of Resource Theory, making them relevant to Ghana’s public hospitals.

Practitioner/Policy implications: These findings add to organizational psychology by emphasizing the importance of supportive work environments, work-life balance, and psychological well-being in healthcare employee performance.

Research limitation/Implication: The limited sample size used in this study limits the generalisability of the results. A larger sample size could increase the results’ robustness.

Investigate the Repurchase Intentions for Biobased Detergents among Malaysian Consumers through the Lens of SOR Theory

2024-12-26T10:32:21+08:00

Manuscript type: Research paper

Research aims: This paper examines the intention of repurchase towards biobased detergent among Malaysian consumers using the Stimulus- Organism-Response (SOR) theory.

Design/Methodology/Approach: This study used a purposive sampling technique to gather 349 responses for data analysis.

Research findings: The findings in this paper shows performance expectancy, environmental concern, product, promotion, and place have a significant relationship to intention to repurchase for biobased detergent. Meanwhile the effort expectancy, social influence, and price have an insignificant relationship to repurchase intention of biobased detergent.

Theoretical contribution/Originality: This research provides valuable insights to stakeholders to understand the factors that influence repurchase intention to help their businesses develop and market sustainable products effectively.

Practitioner/Policy implications: Examining consumer inclination to repurchase biobased detergents can aid the Malaysian government in assessing the efficacy of related initiatives and making regulatory adjustments as necessary.

Research limitation/Implications: The research only focuses on biobased detergent users.

Trends in Shareholder Activism Literature: A Bibliometric Analysis

2024-12-26T10:40:56+08:00

Manuscript type: Research paper

Research aims: This study uses bibliometric analysis to draw various inferences from shareholder activism (SA) literature published in the Scopus database for the last four decades, from 1983 to 2022. The study highlights the various dimensions and interrelationships of shareholder activism literature.

Design/Methodology/Approach: The available literature was examined using a keyword search, reaching a final sample size of 632 documents. Various bibliometric indicators, such as citation analysis, co-citation network analysis, keyword analysis, bibliographic coupling, and chronological assessment, were employed in the study to draw valuable conclusions.

Research findings: The bibliometric analysis of shareholder activism literature reveals significant trends and shifts over the sample period. The inferences indicate a significant increase in quantity with a main focus on activism, corporate governance, firms’ performance, and corporate strategies. The prominence held by the Journal of Finance (in quantity), Journal of Financial Economics (in citations), and Lucian Bebchuk (prominent author) has a significant impact on acting as a bridge to develop linkages between the various dimensions of SA with high betweenness centrality. These sources and authors have significantly contributed to SA literature and the attention of researchers in this domain.

Theoretical/Research Implications: Shareholder activism is a novel topic, and its bibliometric insights will significantly benefit all future researchers. For researchers, the inferences of the study can provide significant insights regarding the literature in SA by exploring major themes, studies, journals, major contributing institutes, and other valuable inferences regarding coupling and co-citation network analysis that can guide them to identify appropriate research gaps and fill them to make their research more relevant and applicable.

Practitioner/Policy implications: The study’s practical implications have various stakeholders, including investors and policymakers. The study can act as an investment selection tool as the inferences suggest a strong linkage between the firm’s SA and investment decisions and financial performance. The study also provides inferences to frame policies integrating SA as a mechanism to enhance firms’ transparency and accountability and safeguard the interests of minority shareholders.

Research limitation/Implications: The study can be further elaborated to investigate the overlapping relationship between SA, corporate governance, corporate strategies, and investments, which linkages in the current study have presented.

Does CEO Managerial Ability Impacts on Corporate Investment Decisions? The Case of Economic Uncertainty in Political Election Periods

2024-12-26T10:45:32+08:00

Manuscript type: Research paper

Research aims: The objective of this study is to investigate whether CEO managerial ability has an effect on corporate investment decisions, particularly during the presidential election period as moderating role on this nexus.

Design/Methodology/Approach: This research uses a quantitative approach to obtain empirical evidence whether CEO managerial ability affects corporate investment decisions. This research uses a sample of 2,962 firm-year observations of Indonesia-listed firms from the years 2010 to 2020. To obtain our research objectives, we used OLS analysis with STATA 17.0

Research findings: This study found that CEOs’ managerial ability has a significant and positive effect on the firm's investment decision. The authors further address potential endogeneity and check the robustness, use methods including coarsened exact matching and instrument variable approach using Heckman (1976) two-stage least square.

Theoretical contribution/Originality: The research explores the moderating role of CEO ability in the context of election-induced uncertainty and investment decisions. It could contribute to the understanding of how CEO capabilities influence strategic choices under uncertain conditions.

Research implications: This research contributes to the existing literature on the various impacts of CEO managerial ability on firm outcomes. The research also encourages policymakers and regulators to prioritise the development and retention of talented managers to ensure the financial and economic stability of Indonesian firms, particularly during periods of financial distress.

Maximizing Work Effort: Harnessing Perceived Training Opportunities and Intrinsic Motivation

2024-12-26T11:03:44+08:00

Manuscript type: Research paper

Research aims: This study aims to prove that training is far from an indulgence but rather a vital necessity to increase employee work effort.

Design/Methodology/Approach: Using an experimental design, the study explores the link between perceived training opportunities (PTO) and work effort, investigating intrinsic motivation’s moderating role. Data from 208 employees were analysed through confirmatory factor analysis (CFA) and structural equation modelling (PLS-SEM).

Research findings: The findings unveiled a positive correlation between perceived training opportunities and work effort. Although intrinsic motivation doesn’t moderate this connection, it was found to exert a positive influence on work effort.

Theoretical contribution/Originality: The research highlights the pertinence of perceived training opportunities on employees’ willingness to exert extra work effort.

Practitioner/Policy implications: Organizations should prioritize providing ample training opportunities while communicating their availability. Even in tough financial times, maintaining training’s importance signals employees’ value.

Research limitation/Implication: The study’s limited sampling and focus on a single province in China may limit its generalizability.