EARNINGS MANAGEMENT PRACTICES AMONG MUSLIM AND NON-MUSLIM MANAGERSIN MALAYSIA

We study the differences between the earnings management practices of the Muslim managed firms and the non-Muslim managed firms listed on the Kuala Lumpur Stock Exchange in Malaysia. The influence of Muslim managers on the earnings management practices among the sample firms is measured using discretionary accruals. We compile data for 99 firms over a period of 16 years,i.e. from 1980-1996, to estimate the discretionary accruals using regression analysis. The estimated discretionary accruals are then compared with the actual discretionary accruals in 1997 to measure the differences in the earnings management practices. We hypothesise that firms having a majority of Muslim managers will resort to less earnings management than firms that have a majority of non-Muslim managers. The study finds no statistical evidence to uphold the said hypothesis.