Abstract
The purpose of this paper is to investigate whether the Chief Executive Officer (CEO) characteristics affect the occurrence of financial restatements in Malaysian firms. The CEO characteristics used in this study were tenure, honorific title, gender, expertise, and age. In addition, the financial restatement has been measured as a dummy variable as to whether companies restate their financial statements or not. The sample of this study comprised 442 companies listed in the main market of Bursa Malaysia during the period 2012–2016. The panel data method was utilised to analyse the data. This study employed a logistic regression analysis. The results of this study revealed that there is a positive and significant relationship between CEO tenure and CEO gender with financial restatements. In addition, this study found a negative and significant relationship between CEO honorific title and financial restatements. However, the results found insignificant relationships between CEO expertise and age with financial restatements. This study highlighted the importance of considering CEO characteristics as one of the influential determinants of financial restatements in Malaysian companies.
Highlights
The events of high profile financial related cases, which have caused investors to incur losses, have increased the attention of many to the subject of financial restatements
The result is in line with hypothesis 1, which predicts a significant linkage between Chief Executive Officer (CEO) tenure and financial restatements
The current study attempted to investigate the impact of CEO characteristics and financial restatements in Malaysia
Summary
The events of high profile financial related cases, which have caused investors to incur losses, have increased the attention of many to the subject of financial restatements. Amongst the notable cases was that of Enron which had previously declared a US$618 million loss in its 2001 third quarterly report, before admitting to restating its earnings for a number of years not long after that (Sridharan, Caines, McMillan, & Summers, 2002). Such a confession caused Enron to suffer a sharp plummet in its shares from only a few cents, from its highest value of 90 USD per share The CEOs often determine the kind of information that needs to be revealed because they have authority over several decisions (Cheng & Lo, 2006)
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