Value relevance of financial reporting: Evidence from Malaysia

Aboubakar Mirza, Mazrah Malek and Mohamad Ali Abdul-Hamid

Cogent Economics & Finance, 2019, vol. 7, issue 1, 1651623

Abstract: The objective of this paper is to examine the value relevance of financial reporting from a developing country perspective after the adoption of the full set of IFRS. The study utilizes the Ohlson price model to determine the value relevance of financial reporting. The findings show that generally earnings, book value of equity and cash flow from operations are useful for investment decision making, whereas, there is an increasing significance of cash flow from operations in the Malaysian Capital Market. This finding is not consistent with the rationale given by conceptual framework for financial reporting regarding the dominance of earnings in investment decision making due to the perception of managerial bias in the reported earnings and book value of equity in the Malaysian Capital Market over the period 2012–2106. The findings have an important implication for regulators and local standards-setting body to curtail earnings management practices to improve the quality of earnings and book value of equity to increase the investor’s confidence in general purpose financial reporting. The findings of the study contribute to the existing literature by performing a detailed empirical analysis of the value relevance of financial reporting in Malaysia, a developing country where the full set of IFRS has been implemented.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23322039.2019.1651623 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oaefxx:v:7:y:2019:i:1:p:1651623

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/OAEF20

DOI: 10.1080/23322039.2019.1651623

Access Statistics for this article

Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang

More articles in Cogent Economics & Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().