Shariah Governance And Accounting Conservatism

Abstract :

The purpose of this study is to examine the association between religious ethical values and accounting quality. More specifically, we analyse how the principles and ethical framework of Islam, Shariah, affect the accounting conservatism of Malaysian listed firms. We use a sample of 3,252 firm-year observations from 2010 to 2017 of Malaysian listed firms and find that Shariah firms exhibit more conservative reporting than non-Shariah firms. This supports the view that religious ethical values lessen managerial opportunism and aggressive reporting behaviour and, thereby, enhances the quality of accounting earnings.?

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