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Earning Quality in MESDAQ Company

Siti Nor Junita, Mohd Radzi (2008) Earning Quality in MESDAQ Company. Masters thesis, Universiti Utara Malaysia.

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Abstract

Earning Management can be viewed from financial reporting perspective. From a financial reporting perspective, managers may use earning management to meet analysts' earning forecast, thereby avoiding the strong negative share price reaction that quickly follow a failure to meet investor expectations. Also, they may record excessive write off or emphasize earning construct such as net income. Management may use it to create a stream of smooth and growing earning over time. Give securities market efficiency, this requires management to draw on its inside information. Thus, earning management can be a vehicle for the communication of management's inside information to investors. Too much earning management, however, reduces the earning quality and the ability investor to interpret current net income as well, particularly if the earning management is buried in core earning or otherwise not fully disclosed. The reported net income is useful to investor in evaluating future firm performance but excessive earning management may reduce this usefulness. Thus this study is very important because from the research findings shows that the size of audit firm, internal audit establishment and former senior auditor as company director have no significantly effect on earning management which being proxy by total discretionary accruals. An understanding of the earning management is also important to accountants because it enables an improved understanding of the usefulness of the net income, especially for reporting to investor. It also may assist them to avoid some of the serious legal and reputation consequences that arise when firms become financially distress where such distress is often preceded by serious abuse of earnings management.

Item Type: Thesis (Masters)
Uncontrolled Keywords: Earning Management, Financial Reporting
Subjects: H Social Sciences > HF Commerce. > HF5601-5689 Accounting
Divisions: College of Business (COB)
Depositing User: Mr Husni Ismail
Date Deposited: 06 Sep 2009 01:52
Last Modified: 24 Jul 2013 12:06
URI: http://etd.uum.edu.my/id/eprint/234

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