EFFECTS OF CORPORATE GOVERNANCE ON ACCOUNTING CONSERVATISM: AN INVESTIGATION OF THE MODERATING ROLE OF IFRS ADOPTION IN THE LISTED FIRMS IN MALAYSIA, SINGAPORE, AND THAILAND

Abstract

The purposes of this study were to examine the effect of the OECD principles corporate governance (2004) on accounting conservatism and to investigate the role of the IFRS adoption in the listed firms in Malaysia, Singapore, and Thailand as a moderating variable influencing the impact of the OECD principles corporate governance on accounting conservatism. This study captured accounting conservatism measured through discretionary accruals models. The levels of IFRS modifications, according to Felski (2017), were divided into three groups: (1) the full IFRS adoption, (2) the local IFRS adoption by design, and (3) the local IFRS adoption by default. The data in this research were secondary data obtained from 603 listed firms in the stock markets in Malaysia and Singapore, and the Stock Exchange of Thailand in 2018. The samples were profitable firms from all industrial groups, excluding financial sectors. The data were analyzed using multiple linear regression, analysis of variance (ANOVA), and Z-scores. The research results revealed that the OECD principles corporate governance had an effect on accounting conservatism. Moreover, complementary effects and substitutional effects were found on accounting conservatism. The IFRS adoption, as a moderating variable, had mixed effects on the impact of the OECD principles corporate governance on accounting conservatism. This study may benefit corporate governance regulators and corporate governance policymakers in planning and improving the mechanisms affecting accounting conservatism.