Managerial Ownership, Leverage and Audit Quality Impact on Firm Performance: Evidence from the Malaysian ACE Market

Accounting & Taxation, v. 5 (1) p. 59-70

12 Pages Posted: 6 Sep 2013

See all articles by Zunaidah Sulong

Zunaidah Sulong

University Sultan Zainal Abidin

John C. Gardner

University of New Orleans - Department of Accounting

Amariah Hanum Hussin

UiTM Kampus Negeri Sembilan

Zuraidah Mohd Sanusi

Universiti Teknologi MARA (UiTM)

Carl B McGowan

Norfolk State Universtiy

Date Written: 2013

Abstract

This paper extends the agency cost literature by examining whether managerial ownership, leverage and audit quality are associated with higher performance of companies traded on the Malaysian ACE (Access, Certainty, Efficiency) Market. The sample consists of 82 companies listed on the Malaysian ACE Market for the period from 2007 to 2009. Analyses of descriptive statistics, correlation analysis, and multiple regressions are used to address the research hypotheses. The descriptive statistics analysis reveals that ACE Market companies do not perform better for the three year test period. This result may explain why the number of listed stocks on the ACE Market decreased from 2006 to 2009. Contrary to the proposed hypotheses, this study finds that audit quality has a statistically significant negative effect on firm performance. The empirical results suggest that higher audit fees received by auditors may create bonding between client and auditors.

Keywords: Managerial ownership, Leverage, Audit quality, Governance mechanisms, ACE market

JEL Classification: G15, G32, M41

Suggested Citation

Sulong, Zunaidah and Gardner, John C. and Hussin, Amariah Hanum and Mohd Sanusi, Zuraidah and McGowan, Carl B, Managerial Ownership, Leverage and Audit Quality Impact on Firm Performance: Evidence from the Malaysian ACE Market (2013). Accounting & Taxation, v. 5 (1) p. 59-70, Available at SSRN: https://ssrn.com/abstract=2210465

Zunaidah Sulong (Contact Author)

University Sultan Zainal Abidin ( email )

Kampus Gong Badak
Kuala Terengganu, 20400
Malaysia

John C. Gardner

University of New Orleans - Department of Accounting ( email )

112D Kirschman Hall
2000 Lakeshore Drive
New Orleans, LA 70148
United States

Amariah Hanum Hussin

UiTM Kampus Negeri Sembilan ( email )

Zuraidah Mohd Sanusi

Universiti Teknologi MARA (UiTM) ( email )

Carl B McGowan

Norfolk State Universtiy ( email )

Norfolk, VA 23504
United States

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