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Managerial Ownership, Leverage And Audit Quality Impact On Firm Performance: Evidence From The Malaysian Ace Market

Author

Listed:
  • Zunaidah Sulong
  • John C. Gardner
  • Amariah Hanum Hussin
  • Zuraidah Mohd Sanusi
  • Carl B. McGowan, Jr.

Abstract

This paper extends the agency cost literature by examining whether managerial ownership, leverage and audit quality are associated with higher performance of companies traded on the Malaysian ACE (Access, Certainty, Efficiency) Market. The sample consists of 82 companies listed on the Malaysian ACE Market for the period from 2007 to 2009. Analyses of descriptive statistics, correlation analysis, and multiple regressions are used to address the research hypotheses. The descriptive statistics analysis reveals that ACE Market companies do not perform better for the three year test period. This result may explain why the number of listed stocks on the ACE Market decreased from 2006 to 2009. Contrary to the proposed hypotheses, this study finds that audit quality has a statistically significant negative effect on firm performance. The empirical results suggest that higher audit fees received by auditors may create bonding between client and auditors.

Suggested Citation

  • Zunaidah Sulong & John C. Gardner & Amariah Hanum Hussin & Zuraidah Mohd Sanusi & Carl B. McGowan, Jr., 2013. "Managerial Ownership, Leverage And Audit Quality Impact On Firm Performance: Evidence From The Malaysian Ace Market," Accounting & Taxation, The Institute for Business and Finance Research, vol. 5(1), pages 59-70.
    • Handle: RePEc:ibf:acttax:v:5:y:2013:i:1:p:59-70
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    References listed on IDEAS

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    Cited by:

    1. Sailendra SAILENDRA & Etty MURWANINGSARI & Sekar MAYANGSARI, 2019. "The Influence of Free Float Shares and Audit Quality on Company Performance: Evidence from Indonesia," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 17(154), pages 274-274.
    2. Tomislava Pavic Kramaric, 2023. "Performance of Slovenian Listed Firms during COVID-19 Out-break," International Journal of Economic Sciences, European Research Center, vol. 12(1), pages 163-177, May.
    3. Kogilavani Apadore & Siti Subaryani Binti Zainol, 2014. "Determinants of Corporate Governance and Corporate Performance among Consumer Product Industry in Malaysia: A Theoretical Model," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 159-165, April.
    4. 子, 鬼谷, 2020. "The Roles of Foreign Ownership and Growth Opportunity amid the Trade War: Evidence from an Emerging Country," OSF Preprints cr7xp, Center for Open Science.
    5. Sohail Ahmad Javeed & Tze San Ong & Rashid Latief & Haslinah Muhamad & Wei Ni Soh, 2021. "Conceptualizing the Moderating Role of CEO Power and Ownership Concentration in the Relationship between Audit Committee and Firm Performance: Empirical Evidence from Pakistan," Sustainability, MDPI, vol. 13(11), pages 1-26, June.
    6. Mai, Nhat Chi, 2020. "The Roles of Foreign Ownership and Growth Opportunity amid the Trade War: Evidence from an Emerging Country," OSF Preprints 49cdt, Center for Open Science.
    7. Usman Sattar & Sohail Ahmad Javeed & Rashid Latief, 2020. "How Audit Quality Affects the Firm Performance with the Moderating Role of the Product Market Competition: Empirical Evidence from Pakistani Manufacturing Firms," Sustainability, MDPI, vol. 12(10), pages 1-20, May.
    8. , Aisdl, 2020. "The Roles of Foreign Ownership and Growth Opportunity amid the Trade War: Evidence from an Emerging Country," OSF Preprints 7w2m9, Center for Open Science.
    9. Tomislava Pavic Kramaric, 2023. "Performance of Slovenian Listed Firms during COVID-19 Out-break," International Journal of Economic Sciences, European Research Center, vol. 12(1), pages 146-160, May.

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    More about this item

    Keywords

    Managerial ownership; Leverage; Audit quality; Governance mechanisms; ACE market;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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