Ethnicity and accounting conservatism: Malaysian evidence
Faculty of Business and Law
School of Accounting, Finance and Economics / Finance, Economics, Markets and Accounting Research Centre
Purpose - The purpose of this paper is to empirically test the association between two ethnic groups: Bumiputera directors and Chinese directors, on the incidence of accounting conservatism. Design/methodology/approach - A panel data analysis of financial statement data was conducted for 300 Malaysian listed firms between 2001 and 2007. Findings - The analysis shows that the ethnic groups influence the adoption of conservatism, but that the evidence is mixed, implying that there could be factors other than ethnicity which explained the directors' behaviour. Practical implications - The results provide a useful input to the proponents of harmonisation in financial reporting, in that Malaysian financial reports do not appear to be influenced by the ethnicity of participating groups. Originality/value - This is the first paper to measure empirically the impact of ethnicity on the incidence of accounting conservatism.