Asian Journal of Business and Accounting

Editorial Notes

Che Ruhana Isa, Noor Sharoja Sapiei, Yeong Wai Chung — Sat, 31 Dec 2022 00:00:00 +0800

Internal Audit Effectiveness in Insurance and Takaful Companies in Malaysia: A Study of Internal Auditors and Auditees’ Perceptions

Noor Adwa Sulaiman, Nadratun Na’im Kamarudin, Suhaily Shahimi — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Purpose: This study examines the views of internal auditors and auditees on factors affecting internal audit effectiveness (IAE) in insurance and takaful companies in Malaysia.
Design/Methodology/Approach: A total of 240 respondents participated in a self-administered survey questionnaire.
Findings: Multiple regression analyses suggests independence as well as the resources of internal audit functions (IAF) and relationship with the audit committee is perceived to affect IAE. However, management support is perceived to be less significant in affecting IAE. Furthermore, independent t-test and eta squared analyses show that respondents perceive the factors that significantly affect IAE differently, with independent internal audits scoring the highest.
Research limitations/Implications: The respondents were only limited to internal auditors and auditees in insurance and takaful companies. Practical implications: Such empirical evidence is expected to be used by companies, regulators as well as researchers in understanding the prevailing factors affecting IAE in insurance and takaful companies. Originality/Value: The value of this study is grounded on limited studies of IAE in the financial industry, specifically insurance and takaful companies, and the analysis of both auditors and auditees’ views on the principal factors affecting IAE.

Does Gender Diversity Moderate the Nexus Between Board Characteristics and Earnings Management?

Tonoy Roy, Ervina Alfan — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper Research aims: This study examines the effect of board characteristics on earnings management and the moderating effect of gender diversity over this nexus by investigating 393 Bursa Malaysia listed companies from 2014 to 2018. Design/Methodology/Approach: This study applies the performance-adjusted Jones model (Dechow et al., 1996) and the performance-matched Jones model (Kothari et al., 2005) to measure accrual-based earnings management. Research findings: Based on the results, the agency theory fails to illustrate that board characteristics (i.e., defined by the attributes of board independence, board size, and non-CEO duality) are effective in reducing earnings management. On the other hand, the results show that gender diversity in independent directorship and board membership apparently reduces the level of earnings management. However, this research finds no significant moderating effect of gender diversity on the relationship between CEO duality and earnings management. Theoretical contribution/Originality: This study adds to the literature by demonstrating that the application of agency theory does not have a significant impact on reducing earnings management in the Malaysian context. Applying gender socialisation theory, the findings of this study show successful moderation of gender diversity in terms of reducing the level of earnings management. Practitioner/Policy implication: The results on gender diversity are likely of interest to policymakers to come up with regulations related to ensuring an increasing presence of female directors in the boardrooms to increase the board gender diversity. Research limitation: This study examines only three board characteristics under corporate governance, and measures only accrual-based earnings management. Moreover, the sample is restricted to only non-financial listed companies.

Mean-Variance and Single-Index Model Portfolio Optimisation:Case in the Indonesian Stock Market

Adi Kurniawan Yusup — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: This study aims to compare the performance of meanvariance
and single-index models in creating the optimal portfolio.
Design/Methodology/Approach: This study creates optimal portfolios
using the mean-variance and single-index models with daily stock return
data of 38 companies listed on the LQ45 index, IDX Composite index
and Bank Indonesia’s 7-Day (Reverse) Repo Rate from January 1, 2012 to
December 31, 2019. The two models are compared using the Sharpe ratio.
Research findings: The result shows that the single-index model
dominates the Indonesian Stock Exchange (IDX), more so than the meanvariance
model. BBCA has the highest proportion for both mean-variance
and single-index portfolios.
Theoretical contribution/Originality: This study compares two popular
portfolio models in the Indonesian stock market.
Practitioner/Policy implication: This study helps investors to create
optimal portfolios using a model that is more suited to the IDX.
Research limitation/Implication: This study creates the optimal portfolio
without differentiating risk preferences (i.e., risk averse, risk moderate
and risk taker). In addition, this research only uses daily return data and
does not compare it with weekly and monthly data.

Religiosity and External Whistleblowing Intention

Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: This study explores the role of religiosity in external
whistleblowing intention by extending the attitude-behavioural-context
(ABC) theory to the whistleblowing context in Malaysia. A Muslim has
the responsibility to report any wrongdoing in their organisation to
protect public interest, as part of amr bil ma‘ruf wa nahy ‘anil munkar, or
enjoining good and forbidding evil.
Design/Methodology/Approach: This study utilises a structured
questionnaire involving 185 Muslim auditors in Malaysia. A purposive
non-probability sampling technique was used, and the data was analysed
using SmartPLS 3.3.3.
Research findings: The results reveal that religiosity positively influences
the perceived control, self-efficacy, and external whistleblowing intention
of Muslim auditors, but found no evidence to support the hypotheses
related to their attitudes. Further, perceived control and self-efficacy are
shown to positively influence attitude.Theoretical contribution/Originality: From the perspective of the ABC
theory, the findings suggest that self-efficacy and perceived control are
the contextual factors that strongly influence external whistleblowing,
and that religiosity can be added to extend the ABC theory in the
whistleblowing context.
Practitioner/Policy implications: The findings are valuable to audit firms
in understanding the effect of religiosity to Muslim auditors to reveal
wrongdoings in their firms.
Research limitation/Implications: This study is among the first to use
ABC theory to examine religiosity in the context of whistleblowing.
Hence, it fills the gap in the existing literature by illustrating how ABC
theory can be applied in the study relating to the ethical behaviour of
accounting professionals.

IFRS Convergence and Value Relevance of Indian Accounting Information: The Earnings-Returns Association Analysis

Juao C. Costa, Lorraine Rayelle Gomes — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: India has recently joined the accounting revolution by
implementing the International Financial Reporting Standards (IFRS)
through the convergence mode. This paper aims to examine the value
relevance of Indian accounting information by finding an association
between stock returns and the levels of earnings and changes in earnings.
Design/Methodology/Approach: The study follows both relative and
incremental association approaches to investigate changes in the value
relevance of accounting information prepared using the IFRS converged
Indian Accounting Standards (Ind-AS), while also examining the impact
of their voluntary use. The study employs the Easton and Harris (1991)
model on accounting data collected from 2012-13 to 2019-20. The panel
data of 7,064 firm-year observations covers 883 firms listed on the
National Stock Exchange (NSE) and uses relevant econometric tests and
multivariate panel regressions to test the hypotheses.
Research findings: The findings reveal a decline in the returns value
relevance following both mandatory and voluntary IFRS convergence.
Theoretical contribution/Originality: The study is the first to document
the changes in value relevance based on stock returns since the IFRS
convergence process began in India.
Practitioner/Policy implication: This line of research is significant
in Indian capital markets to unravel the effects of the new standards
on accounting as well as stock market variables. It has managerial
implications for firm and standard-setters. Research limitation: The value relevance results are based on the returns
model alone and the study does not analyse the price model.

Causes of Customers’ Cognitive Dissonance and Product Return Frequency: A Malaysian Packaged Food Context

Ing Grace, Phang, Ricadonna Pei Ling, Zaiton Osman — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: The cost and frequency of purchased product return are
of considerable concern to marketers and retailers. This paper examines
the post-purchase cognitive states that influence product return and the
drivers that cause cognitive dissonance.
Design/Methodology/Approach: A total of 208 valid responses were
collected and analysed using SPSS v.22 and SmartPLS 3.2.8 software.
Research findings: The findings indicate that emotional dissonance and
product dissonance were the main contributing factors determining
product return frequency. Switching barriers, customer opportunism
and customer attitude significantly affected the level of dissonance; the
consideration of liberal return policies and customer expectations of
product did not. Findings support the mediating hypothesis of emotional
dissonance, and show that product dissonance significantly affects
emotional dissonance. Importantly, emotional dissonance has a larger
impact on product return frequency than product dissonance.
Theoretical implications: This study expands upon the existing literature
by providing valuable insight into understanding the external and
internal factors contributing to cognitive dissonance and product return
frequency. Importantly, the study contributes to the conceptualisation of the mediating role of emotional dissonance in consumer behaviour,
particularly in the retail context.
Practitioner/Policy implications: The findings are useful in assisting
grocery marketers in designing and implementing effective customer
retention strategies and loyalty programmes. Pairing of right perceptions
about product quality, quantity and volume with cost would be effective
to reduce emotional dissonance, and retailers could highlight exclusive
product offerings to reduce product dissonance.
Research limitation/Implication: Future studies could take into account
the influences of demographic variables and various communication
platforms which might cause differences in consumers’ product return
behaviours. This study only presents the findings of a cross-sectional
study. A longitudinal study could be conducted to compare consumers’
product return patterns and cognitive dissonance over a longer time
frame.

Environmental, Social and Governance (ESG) Committees and Performance in Thailand

Muttanachai Suttipun, Parnicha Dechthanabodin — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: The study aims to investigate the extent and level of
environmental, social and governance (ESG) performance of listed
companies in Thailand, and test for the relationship between ESG
committees and performance.
Design/methodology/approach: Using the top 100 Thai listed companies
(364 firm-year observations) from the Stock Exchange of Thailand (SET),
the corporate annual reports during 2018 to 2021 are used to collect ESG
board committee characteristics, while ESG performance is collected
and measured by ESG scores from S&P Capital IQ and Capital IQ
Pro databases. Descriptive analysis, correlation matrix, and multiple
regression are used to analyse the data.
Research findings: The average performance score of ESG in Thailand
is 29.52. In addition, there was an increase of ESG performance by the
top 100 firms in Thailand during the period under study. There is a
significantly positive relationship between independent ESG committees
and ESG performance, while dual positions between top management and
ESG committees is negatively correlated with ESG performance.
Theoretical contribution/originality: The findings of the relationship
between ESG committees and performance demonstrates that agency
theory can be used to explain the factors influencing ESG performance
by Thai listed companies.

Short-form Video Content (SVC) Engagement and Marketing Capabilities

Darlin Apasrawirote, Kritcha Yawised, Maneerut Chatrangsan, Paisarn Muneesawang — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: This study aims to investigate the role of short-form
video content (SVC) in the association between marketing capabilities,
influencers, and business brand engagement performance.
Design/Methodology/Approach: Data was collected from 146 business
owners and managers of private businesses from the central business
district areas of the lower northern province of Thailand. A partial least
square structure equation modelling (PLS-SEM) analysis was performed
to examine the proposed relationships.
Research findings: The findings indicate that SVCs enabled brand
engagement and resulted in increased satisfaction with the influencer
experience. The study found a positive relationship between marketing
capabilities, SVCs, influencers, and brand engagement performance.
Theoretical contribution/Originality: This study also contributes by
providing empirical evidence of the mediation of short-form video
content in the relationship between marketing capabilities and brand
performance, thus suggesting that, in terms of the resource-based
view (RBV), SVCs integrated with marketing capabilities contribute to
fostering influencers to promote brand perception values into competitive
advantage, while influencers are reaffirmed as having a positive impact
on brand performance. Practitioner/Policy implications: This research also provides a practical
outlook for businesses to better understand the adoption of SVCs
at an initial stage and important practical implications for business
entrepreneurs, managers, and practitioners regarding the use of SVCs to
improve brand engagement performance.
Research limitation: First, this study was limited by its focus on primary
data collected using a survey approach. Therefore, future research
may need to emphasise more subjective rather than objective research.
Second, as this study focuses on top executives and higher levels of
marketing managers, it could introduce potential biases. Further research,
through the use of multiple informants (i.e., IT managers, lower-level
frontline staff, etc.) in each business with well-rounded perspectives,
could provide a deeper insight into the issues regarding such initiatives.
Finally, more constructs related to the proposed research framework can
be investigated.

What Should Companies Do to Improve Brand Awareness Through Instagram? The Lens of Signalling Theory

Tatik Suryani, Abu Amar Fauzi, Mochamad Nurhadi — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: This study investigates potential factors of electronic
service quality dimensions on the improvement of brand awareness
among customers through the social media platform Instagram.
Design/Methodology/Approach: The study involves 398 respondents
across Java Island, Indonesia, and employed a PLS-SEM approach to
analyse the data.
Research findings: The findings indicate that the electronic service quality
dimensions of Instagram, in terms of content relevance, content quality,
information quality and contact availability, significantly improve brand
awareness.
Theoretical contribution/Originality: This study contributes to the
electronic service quality and brand awareness literature by validating
four potential service quality dimensions of Instagram that are effective
instruments for improving brand awareness.
Practitioner/Policy implication: This study offers managerial
recommendations for companies that see Instagram as a prospective social
media tool for enhancing brand awareness. Companies should focus
on managing their Instagram accounts by providing relevant content,
qualified content, qualified information, and ensuring the availability of
their contact details.
Research limitation/Implications: To enhance generalisability, we suggest
future studies examine how brand awareness improvement could be
made across social media accounts with broader customer segments,
either SMEs or big corporations.

Power of Tax Authorities, Tax Morale, and Tax Compliance: A Mediation Analysis in East Malaysia

Mohd Allif Anwar Abu Bakar, Mohd Rizal Palil, Ruhanita Maelah, Mohd Helmi Ali — Sat, 31 Dec 2022 00:00:00 +0800

Manuscript type: Research paper
Research aims: This paper aims to scrutinise the association between the
power-based model (power of tax authorities) and sociopsychological
factors (tax morale) in the theoretical framework of the tax compliance
model
Design/Methodology/Approach: A survey was completed by 116 selfemployed
and salaried individuals in East Malaysia. Partial Least Squares-
SEM (PLS-SEM) was employed to analyse the data.
Research findings: The results show no impact of the power of tax
authorities (coercive and legitimate power) on tax compliance. Only the
coercive power of tax authorities has a significantly positive effect on tax
morale. However, a significant negative relationship was found between
tax morale and tax compliance. Finally, tax morale is proven to mediate
coercive power and tax compliance.
Theoretical contribution/originality: The study adds to the body of
knowledge by including the power of tax authority and tax morale in
a tax compliance model. Theoretically, this study contributes to the
literature that moral consideration should not be overlooked in its
mediating value between the power of tax authorities and tax compliance.
Practitioner/policy implications: The present study provides novel
insight into how tax administrators, especially the Inland Revenue Board
of Malaysia (LHDN), utilise their power to influence tax morale and tax
compliance. Research limitation: The study’s limitation is that only a minority of
higher-income and self-employed respondents participated. Future
research should consider expanding the existing tax compliance model to
be tested in a different region. Besides, other sociodemographic variables
can be used as possible moderators in future studies.