Earnings Management, Ownership Expropriation and Brokerage Fee of Malaysian Property Companies

Ung, Lik-Jing and Brahmana, Rayenda and Puah, Chin Hong (2014): Earnings Management, Ownership Expropriation and Brokerage Fee of Malaysian Property Companies.

Abstract

Real estate values in Malaysia have climbed steadily over the years due to a combination of reasons giving companies a higher brokerage fee. In corporate governance literature, ownership expropriation is crucial in the relationship between income (brokerage fee) and earnings management. However, research investigating whether real estate companies might manipulate their earnings through the brokerage fee across ownership expropriation is limited. Therefore, this study uses real estate firms listed on the Kuala Lumpur Stock Exchange (KLSE) to investigate how the brokerage fee in the real estate industry might affect the earnings management of firms across its ownership expropriation. Using annual report data, we investigate the associations over a panel for the period 2008-2012. Robust panel regression is used to divulge the probability values with reference to robust White standard errors that regulate heteroscedasticity errors. Overall, our results show that high brokerage fees would drive more events of earnings management and that, generally, the ownership concentration among Malaysian real estate firms significantly affects the earnings management of the firms.

• Item Type: MPRA Paper
• Language: English
• Keywords: Brokerage Fee; Ownership Expropriation; Earnings Management; Corporate Governance
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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