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Corporate governance, board ethnicity and financial statement fraud: evidence from Malaysia

Author

Listed:
  • Noorul Azwin Binti Md Nasir
  • Muhammad Jahangir Ali
  • Kamran Ahmed

Abstract

Purpose - This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors investigate whether financial statement fraud firms improve their governance mechanisms compared to non-fraud firms subsequent to the fraud year. Design/methodology/approach - The authors use hand-collected data comprising 76 financial statement fraud and 76 non-fraud firms over a period of eight years from 2001 to 2008. Findings - Using a univariate and logistic regression model, the results demonstrate a significant positive relationship between the proportion of Malay directors on the board and the financial statement fraud. The authors also find that fraud firms significantly increase the proportion of independent directors on their boards, increase the frequency of board and audit committee meetings and reduce duality subsequent to the detection of financial statement fraud compared to the non-fraud firms. Originality/value - The findings of the study are useful to policy-makers, regulators, firms and investors.

Suggested Citation

  • Noorul Azwin Binti Md Nasir & Muhammad Jahangir Ali & Kamran Ahmed, 2019. "Corporate governance, board ethnicity and financial statement fraud: evidence from Malaysia," Accounting Research Journal, Emerald Group Publishing Limited, vol. 32(3), pages 514-531, September.
    • Handle: RePEc:eme:arjpps:arj-02-2018-0024
    DOI: 10.1108/ARJ-02-2018-0024
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    Citations

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    Cited by:

    1. Patrick Velte, 2023. "The link between corporate governance and corporate financial misconduct. A review of archival studies and implications for future research," Management Review Quarterly, Springer, vol. 73(1), pages 353-411, February.
    2. Lu, Pu & Wang, Yong & Li, Bing, 2024. "Short selling and corporate financial fraud: Empirical evidence from China," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1569-1582.
    3. SABĂU (POPA) Andrada Ioana & SAFTA (PLEȘA) Ioana Lavinia & BORLEA Nicolae Sorin, 2023. "Analysis Of The Quality Of Corporate Governance. Case For Romanian Companies," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 75(1), pages 66-79, April.

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