Syarifah Saffa’ Najwa Tuan Besar

Faculty of Accountancy, Universiti Teknologi MARA

Malaysia

sysaffanajwa@gmail.com

Examining upper echelons managers’ characteristics on financial restatements

Mazurina Mohd Ali

Faculty of Accountancy, Universiti Teknologi MARA

Malaysia

mazurina@salam.uitm.edu.my

Erlane K Ghani

Accounting Research Institute, Universiti Teknologi MARA

Malaysia

erlanekg@salam.uitm.edu.my

Abstract. This study examines the effect of manager’s characteristics on financial restatements among Malaysian public listed firms. Manager’s characteristics in this study refer to the Chief Executive Officer’s (CEO) and Chairman of Audit Committee’s (CAC) characteristics in an organisation. Using content analysis on 750 annual reports of 150 public listed firms in Bursa Malaysia, this study analyses the relationship between CEO and CAC's characteristics and financial restatements. The results show that only CEO’s characteristics in terms of educational and functional background significantly affect the financial restatements of the listed firms but the results are positive. The implication of this study is that more thorough recruitment of top managers is needed as their specific characteristics affect the financial restatement decisions. This study provides new data for the regulatory bodies which can be used further in setting rules and regulations in relation to managers for preventing aggressive financial restatements among the public listed firms.

Received: June, 2017

1st Revision: August, 2017

Accepted: October, 2017

DOI: 10.14254/2071-8330.2017/10-4/14

JEL Classification: L25, M41

Keywords: Financial restatement, Upper Echelon theory, managers’ characteristics, listed firms, Malaysia