TAX AVOIDANCE AND MANAGEMENT FRAUD IN MALAYSIAN PUBLIC LIMITED COMPANIES: CONCEPTUAL PAPER
DOI:
https://doi.org/10.24191/VoA.v18i1.11657Keywords:
Tax avoidance, Management fraud, Public Limited CompaniesAbstract
Tax avoidance and management fraud have occurred all over the world every year. This study aims to examine the association between tax avoidance and the incidence of alleged management fraud in Malaysia. Hence, this study attempts to investigate the influence of tax avoidance on management fraud in public companies listed in the Main Market of Bursa Malaysia. This study used secondary data and quantitative analysis. The unit of analysis of this study was companies being prosecuted by the Securities Commission of Malaysia for management fraud from 2017 to 2020. Apart from contributing to the tax avoidance and management fraud literature, this study is expected to benefit various parties especially regulators and policymakers such as the Inland Revenue Board of Malaysia, Bursa Malaysia and Securities Commission of Malaysia to improve the tax system and financial reporting quality in Malaysia. This study enhances public understanding of tax avoidance and management fraud as well as well as contributes to improve detection, deterrence, and investigation of tax avoidance and management fraud.
References
Abdullah, W. N., & Said, R. (2019). Audit and risk committee in financial crime prevention. Journal of Financial Crime, 26(1), 223–234. https://doi.org/10.1108/JFC-11-2017-0116
ACCA Global. (2020). Malaysian Companies Act 2016: an overview. Retrieved 22 February 2021 from https://www.accaglobal.com/in/en/student/exam-support-resources/fundamentals-exams-study-resources/f4/technical-articles/mys-comp-act.html
ACFE. (2020). Report to the nations: 2020 Global study on occupational fraud and abuse. In Association of Certified Fraud Examiners. Retrieved 22 February 2021 from https://www.acfe.com/report-to-the-nations/2020/
Aghghaleh, S. F., Mohamed, Z. M., & Rahmat, M. M. (2016). Detecting Financial Statement Frauds in Malaysia: Comparing the Abilities of Beneish and Dechow Models. Asian Journal of Accounting and Governance, 7, 57–65. https://doi.org/10.17576/ajag-2016-07-05
AICPA. (2017). Consideration of Fraud in a Financial Statement Audit. Audit and Accounting Guide, 217–230. https://doi.org/10.1002/9781119557630.ch12
Alwi, M., Wan Ismail, W. A., & Kamarudin, K. A. (2013). The effectiveness of audit committee in relation to financial reporting fraud. The 5th International Conference on Financial Criminology (ICFC) 2013, 332–344.
Carcello, J. J. V, & Hermanson, D. D. R. (2008). Fraudulent Financial Reporting: How Do We Close the Knowledge Gap? November, 2–23.
Chenguel, M. bechir. (2020). Financial Fraud and Managers , Causes and Effects. November. https://doi.org/10.5772/intechopen.93494
Dut, M. A. (2016). The Development of Internal Controls to Detect and Prevent Financial Statement Fraud. PhD dissertation, Northcentral University.
Ghafoor, A., Zainudin, R., & Mahdzan, N. S. (2019). Factors Eliciting Corporate Fraud in Emerging Markets: Case of Firms Subject to Enforcement Actions in Malaysia. Journal of Business Ethics, 160(2), 587–608. https://doi.org/10.1007/s10551-018-3877-3
Hasnan, S., Abdul Rahman, R., & Mahenthiran, S. (2008). Management Predisposition, Motive, Opportunity, and Earnings Management for Fraudulent Financial Reporting in Malaysia. 1–49. https://doi.org/10.2139/ssrn.1321455
Hassan, S., Abdul Rahman, R., & Mahenthiran, S. (2014). Determinants of fraudulent financial reporting: Evidence from Malaysia. Jurnal Pengurusan, 42(2014), 103–117.
Howe, M. A. (1999). Management fraud and earnings management. PhD dissertation, University of Connecticut.
Jarboui, A., Kachouri Ben Saad, M., & Riguen, R. (2020). Tax avoidance: do board gender diversity and sustainability performance make a difference? Journal of Financial Crime. https://doi.org/10.1108/JFC-09-2019-0122
Kamarudin, K. A., Ismail, W. A. W., & Mustapha, W. A. H. W. (2012). Aggressive Financial Reporting and Corporate Fraud. Procedia - Social and Behavioral Sciences, 65, 638–643. https://doi.org/10.1016/j.sbspro.2012.11.177
Kassem, R., & Higson, A. (2012). Financial Reporting Fraud : Are Standards ’ Setters and External Auditors doing enough ? International Journal of Business and Social Science, 3(19), 283–291.
Kassem, Rasha. (2018). Exploring external auditors’ perceptions of the motivations behind management fraud in Egypt – a mixed methods approach. Managerial Auditing Journal, 33(1), 16–34. https://doi.org/10.1108/MAJ-11-2016-1470
Lau, C. K., & Ooi, K. W. (2016). A case study on fraudulent financial reporting: Evidence from Malaysia. Accounting Research Journal, 29(1), 4–19. https://doi.org/10.1108/ARJ-11-2013-0084
Lenard, M. J., Yu, B., York, E. A., & Wu, S. (2017). Female business leaders and the incidence of fraud litigation. Managerial Finance, 43(1), 59–75. https://doi.org/10.1108/MF-04-2016-0123
Lennox, C., Lisowsky, P., & Pittman, J. (2013). Tax Aggressiveness and Accounting Fraud. Journal of Accounting Research, 51(4), 739–778. https://doi.org/10.1111/joar.12002
Luo, J. hui, Peng, C., & Zhang, X. (2020). The impact of CFO gender on corporate fraud: Evidence from China. Pacific Basin Finance Journal, 63(July), 101404. https://doi.org/10.1016/j.pacfin.2020.101404
Malaysian Securities Commission. (2018). Corporate Governance Strategic Priorities 2017-2020. Retrieved 22 February 2021 from www.sc.com.my
Maulidi, A. (2020). Critiques and further directions for fraud studies: Reconstructing misconceptions about developing fraud theories. Journal of Financial Crime, 27(2), 323–335. https://doi.org/10.1108/JFC-07-2019-0100
Md Nasir, N. A., Ali, M. J., & Ahmed, K. (2019). Corporate governance, board ethnicity and financial statement fraud: evidence from Malaysia. Accounting Research Journal, 32(3), 514–531. https://doi.org/10.1108/ARJ-02-2018-0024
Nelson, S. P. (2011). Fraudulent Financial Reporting: An Empirical Analysis in Malaysia. Ssrn. https://doi.org/10.2139/ssrn.1966317
Ngah, Z. A., Ismail, N., & Abd Hamid, N. (2020). Tax evasion through fraudulent financial reporting amongst SMEs in Malaysia. Journal of Financial Crime. https://doi.org/10.1108/JFC-06-2020-0122
Omar, N., Johari, Z. A., & Smith, M. (2017). Predicting fraudulent financial reporting using artificial neural network. Journal of Financial Crime, 24(2), 362–387. https://doi.org/10.1108/JFC-11-2015-0061
Ortas, E., & Gallego-Álvarez, I. (2020). Bridging the gap between corporate social responsibility performance and tax aggressiveness: The moderating role of national culture. Accounting, Auditing and Accountability Journal. https://doi.org/10.1108/AAAJ-03-2017-2896
PwC. (2020). Fighting fraud : A never-ending battle. PwC’s Global Economic Crime and Fraud Survey. Retrieved 22 February 2021 from https://www.pwc.com/gx/en/forensics/gecs-2020/pdf/global-economic-crime-and-fraud-survey-2020.pdf
Razali, M. W. M., Yi, P. X., Brahmana, R. K., & Tak, A. H. (2019). Malaysian Listed Firm’s Tax Avoidance: Another Earnings Management Strategy? International Journal of Academic Research in Business and Social Sciences, 9(2), 643–655. https://doi.org/10.6007/IJARBSS/v9-i2/5597
Saksena, P. (1999). An empirical analysis of the relationship between environment factors and management fraud. https://doi.org/10.16953/deusbed.74839
Saksena, P. (2001). The relationship between environmental factors and management fraud: an empirical analysis. International Journal of Commerce and Management, 11(1), 120–139. https://doi.org/10.1108/eb047418
Securities Commission of Malaysia. (2012). Malaysian Code on Corporate Governance. Retrieved on 3 March 2021 from www.sc.com.my
Sekaran, U., & Bougie, R. (2016). Research Methods for Business. In John Wiley & Sons Ltd. https://doi.org/10.1007/978-94-007-0753-5_102084
Strawhacker, J. C. (2016). Analysis of Factors Influencing Corporate Ethics and Anti-Fraud Programs. Master Dissertation, Utica College.
Tang, T. Y. H. (2016). Privatization, tunneling, and tax avoidance in Chinese SOEs. Asian Review of Accounting, 24(3), 274–294. https://doi.org/10.1108/ARA-08-2014-0091
Wei, Y., Chen, J., & Wirth, C. (2017). Detecting fraud in Chinese listed company balance sheets. Pacific Accounting Review, 29(3), 356–379. https://doi.org/10.1108/par-04-2016-0044
Zainudin, E. F., & Hashim, H. A. (2016). Detecting fraudulent financial reporting using financial ratio. Journal of Financial Reporting and Accounting, 14(2), 266–278. https://doi.org/10.1108/jfra-05-2015-0053
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
