Abstract
The study examines the financial conditions and auditor’s reports in relevance with the delisting of firms from the Malaysian stock market. The dataset comprised of the period of 5 years from 2012 to 2016 and finds out that total 69 companies were delisted from the exchange. By using the descriptive and univariate analysis techniques we find out that poor financial condition is a major reason of delisting of firms in Malaysia. The mean difference between unclean and clean audit opinion groups demonstrate that auditor’s role to evaluate the going concern assumption is also very important as more then 1/3 of the firms received unclean audit opinion due to going concern uncertainty. The unclean group delisted firms on average showed high losses, high negative ROA, high leverage and low total assets as compared to clean group. The study is useful for investors and other stakeholders to make their investing decisions efficiently.
Highlights
Delisting has become a circumstance of crucial significance in recent years; it is defined as the removal of a listed company from the stock exchange (Martinez & Serve, 2017)
DESCRIPTIVE ANALYSIS AND RESULTS Table 1 demonstrates the total number of companies listed in the Bursa Malaysia over the period of five years from 2012 to 2016
The study aims to examine the role of auditor and poor financial performance in relevance with the delisting of firms from the Bursa Malaysia
Summary
Delisting has become a circumstance of crucial significance in recent years; it is defined as the removal of a listed company from the stock exchange (Martinez & Serve, 2017). Advances in Social Sciences Research Journal (ASSRJ) The delisting of a firm by the stock exchange due to the financial reasons is a painful process; it hurts the shareholders who invested in the company. Despite the importance of the issue not many studies have examined the delisting of companies especially in relevance with the going concern opinion.
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