Board process and moderating effects of company secretaries’ attributes on real earnings management in Malaysian listed companies

Abstract

This study aims to establish the relationship between board procedures and earnings management (REM), focusing on Malaysian listed companies during the period from 2017 to 2019. It examines the moderating influence of the company secretary. In analyzing the multicollinear relationships among various board processes and the role of company secretaries in moderating REM practices, the author employs the PCSE method. The analysis utilizes data from Thomson Reuters' Advance DataStream, Bursa Malaysia, company annual reports, and MyData. The results indicate that the length of the CEO’s term of office influences REM values. Specifically, if the organization’s head is appointed from outside the company, REM values tend to be lower. Conversely, if the CEO is internally promoted, REM values are relatively higher. The technical, commercial, and social characteristics of company secretaries impact the relationship between board processes and REM, highlighting their relevance to corporate governance measures and controversies related to earnings management standards. The study offers valuable recommendations for executives and directors aimed at improving the quality of corporate governance systems and decision-making processes. Furthermore, it provides a foundation for regulators and policymakers to enhance or establish governance frameworks that promote ethical business conduct, corporate transparency, and accountability.