Impact of managerial opportunistic factors on earnings management: The case of Malaysian oil and gas public listed companies / Vinothini Karuppiah

Vinothini , Karuppiah (2022) Impact of managerial opportunistic factors on earnings management: The case of Malaysian oil and gas public listed companies / Vinothini Karuppiah. Masters thesis, Universiti Malaya.

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Abstract

The oil crisis in the year of 2014 has led to an economic downturn all over the world. Malaysia is one of the South East Asia‟s major economy as well as vital oil provider and was badly affected by the drop of the oil price. The purpose of this research is to investigate the impact and relationship of free cash flow, bonus plan and financial distress towards earnings management in Malaysian listed oil and gas companies. Moreover, this study also examines the role of audit committee independence as a moderator in the effect of the managerial opportunistic factors chosen in this research on earnings management. This study extends this line of research by using Agency Theory to investigate the objective of this research. The final data population of this study includes from 37 public listed oil and gas companies listed under Malaysia Petroleum Resources Corporation (MPRC) for five years, ranging from 2014 to 2018 which make up to 184 firm-year observations for each variables. The data was mainly collected from the annual reports of these companies. The statistical method that was used to analyse the data was hierarchical regression analysis. The result of this analysis reveals that there is a significant relationship between free cash flow, financial distress and earnings management. Also, audit committee independence has a significant moderating impact on earnings management in the presence of free cash flow. However, the negative impact of this moderating variable on earnings management in the presence of bonus plan and financial distress is not significant.

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