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PurposeThis paper aims to improve the understanding of the institutional pressures that shape the intention to adoptwaqfaccounting and reporting. The study seeks to answer two research questions as follows: what are the challenges in the adoption ofwaqfaccounting and reporting inwaqfinstitutions; and how do institutional pressures influence the adoption ofwaqfreporting in Malaysia. Drawing on the work of DiMaggio and Powell and Scott of institutional theory, this paper provides empirical evidence of institutional pressures on the adoption ofwaqfreporting in Malaysia and the challenges faced in adoptingwaqfaccounting and reporting.Design/methodology/approachThis study uses qualitative research method with an explanatory case study approach. Data are collected through semi-structured interviews with the accountants of State Islamic Religious Council and Customs of Terengganu, an informal conversation with the Deputy Director of Accountant Generals Department of Malaysia and document reviews, mainly the Malaysian Accounting Standard Board Research paper.FindingsThe findings show that coercive pressure such as government regulation contributes to challenges in the adoption ofwaqfaccounting and reporting. Normative pressures contribute to challenges in formulating standardisedwaqfaccounting and reporting, whereas mimetic pressure contributes to challenges in the comparability of thewaqfaccounting and reporting among the state Islamic religious councils in Malaysia. In the efforts towards the standardisation ofwaqfaccounting and reporting practice, a similarity of the process of the standard implementation or the institutional isomorphism of the State Islamic Religious Council in Terengganu is strongly influenced from the result of the mandate of its Board members and Fatwa council members (coercive isomorphism and religion logic) and minor influence from the normative isomorphism (the result of the participants’ education and profession) as well as the result of imitating other State of Islamic Religious Councils (SIRCs) because of the ambiguity of the process or certain practice.Research limitations/implicationsThe study contributes to the knowledge by extending institutional theory and the possible role of religion logic in Islamic perspective to organisational behaviour and accounting development in SIRCs. This study is limited to the understanding of the challenges in the adoption ofwaqfaccounting and reporting but could also be applicable to the adoption of other accounting standards or regulations.Practical implicationsThis paper offers key implications for research, in improving the understanding of contextual factors and decision to adoptwaqfaccounting and reporting. The standard setter needs to be aware of the influence of contextual factors that shape decision towards standardisation of accounting and reporting forwaqf.Originality/valueThe interplay of institutional pressures and implications of religion logic provides an interesting approach to understanding thewaqfinstitutions’ intention to adopt accounting and reporting forwaqf.

This study is motivated by the high frequency of loss occurrence since late 1990s among Malaysian public listed firms, and the conflicting findings of the impact of the macroeconomic conditions and firm-specific attributes on different measures of earnings quality. In addition, this study examines the impact of firms’ specific attributes on earnings quality using a better established theory, known as the life-cycle hypothesis. The objectives of this study are; (1) to examine the relationship between firms’ loss condition on conservatism as an earnings quality measure as well as the moderation of macroeconomic condition on the relationship and (2) to examine the relationship between life-cycle stages and conditional conservatism. Samples for the study are companies listed on Bursa Malaysia from 1995 to 2010. Using the C_Score measure of conservatism as the dependent variable, firms with loss condition, have been found to be significantly more conservative than profit firms. In addition, macroeconomic condition, strengthen the relationship between loss and conservatism when the results indicate that loss firms undergoing economic crisis are significantly more conservative than loss firms under normal economic condition. Incorporating the firms’ life-cycle stages, the study found that growth firms signal fewer losses than mature firms, thus accepting the set hypothesis. Implication of this study is that ignorance of these issues could lead to significantly misleading interpretation of earnings quality.

The cost of equity is a measure of the required return by investors. It is desirable for firms, especially banks, to lower the cost of equity. There are a number of factors related to the quality of information disclosed that could influence the cost of equity. The accounting regulators aim to improve the quality of information by requiring assets to be valued at fair value. However the application of fair value accounting potentially increases information asymmetry, especially if fair value is estimated and subjected to the judgment of the preparers of financial statements. This asymmetric information problem potentially lowers the information quality and increases investors’ estimation risk and thus influences the cost of equity capital. Therefore, this research investigates the effect of fair value accounting on the cost of equity capital for a sample of Asian banks since banks hold a relatively larger proportion of assets at fair value. Using the generalized method of moment model for dynamic panel data, this research finds significant and positive relationship between assets at fair value and the cost of equity. The results found are similar for both quoted and unquoted assets. Thus although to regulators, fair value accounting provide relevant and timely information to investors, assets at fair value are perceived to be risky and as a consequence investors require higher returns. Keywords: Fair value; cost of equity; information asymmetry; information quality ABSTRAK Kos ekuiti adalah ukuran pulangan yang dikehendaki oleh pelabur. Adalah wajar untuk firma, terutamanya bank, merendahkan kos ekuiti. Terdapat beberapa faktor yang berkaitan dengan kualiti maklumat yang dizahirkan yang boleh mempengaruhi kos ekuiti. Pengawal selia perakaunan bertujuan meningkatkan kualiti maklumat dengan memerlukan aset dinilai pada nilai saksama. Walau bagaimanapun pemakaian perakaunan nilai saksama berpotensi meningkatkan maklumat tak seimbang, terutamanya jika nilai saksama dianggarkan dan tertakluk kepada budi bicara penyedia penyata kewangan. Masalah maklumat tak seimbang berpotensi mengurangkan kualiti maklumat dan meningkatkan risiko penganggaran pelabur dan dengan itu mempengaruhi kos ekuiti. Oleh itu, kajian ini mengkaji kesan perakaunan nilai saksama pada kos modal ekuiti untuk sampel yang terdiri daripada bank Asia oleh kerana bank memegang sebahagian yang agak lebih besar aset yang dinilai saksama. Dengan kaedah masa umum untuk data panel dinamik, kajian ini mendapati hubungan yang signifikan dan positif antara aset dinilai saksama dan kos ekuiti. Dapatan kajian adalah sama untuk kedua-dua aset yang disebut harga dan aset yang tidak disebut harga. Oleh itu, walaupun kepada pengawal selia, perakaunan nilai saksama menyediakan maklumat yang relevan dan tepat pada masanya kepada pelabur, aset yang dinilai saksama dilihat sebagai berisiko dan akibatnya pelabur menghendaki pulangan yang lebih tinggi. Kata kunci: Nilai saksama; kos ekuiti; asimetri maklumat; kualiti maklumat

Nowadays, Muslims has been exposed to the increasing number of waqf practice and the importance of waqf to the society due to the huge benefits in the socio-economic development and assist the poor and those in need. However, there is a lack of accounting system and systematic management of waqf assets and the absence of written procedures of recording financial transactions of waqf assets. The purpose of this research is to identify the range of differences of waqf accounting practice in details and discover the rationale behind the diverse of accounting and reporting practices for waqf. It examines accounting and reporting practices in terms of recognition, measurement and disclosure in eleven selected state waqf institutions. It provides an insightful meaning of the issues and challenges on how accounting is practice in these State Islamic Religious Councils (SIRCs). From the analysis conducted, it is found that the financial accounting and reporting related to waqf in SIRCs differs in terms of the guideline used, the recognition and measurement (valuation of waqf asset) as well as the disclosure and reporting practice of waqf. The variations of accounting and reporting practices in these waqf institutions portray the dynamism of waqf accounting and reporting among SIRCs in Malaysia. The reason for the variation in accounting practice is attributed to the nature of SIRCs governance where each SIRC is headed by its ruler (Sultan) as the ultimate authority in Islam and the fatwa councils’ decision. The decision of the Board members with regard to the management and administration of waqf may differ in each states.

Evidence thus far suggests fair value accounting poses risk and affects firms’ returns in some ways. This research, on a sample of Asian banks, improves the understanding of the information risk effect of fair value accounting by examining the moderating role of risk disclosure in the relationship between fair value accounting and the cost of equity capital. The results from a generalised method of moments on dynamic panel data analysis, show that risk disclosure mitigates the asymmetric information problem. Thus the findings contribute towards the standard setters’ effort in improving the practice of fair value accounting, and suggest that there are benefits in mandating disclosure especially for banks.

This paper develops a benchmark return based on real sector for the Malaysian economy. In the modern financial system, the benchmark return, henceforth referred to as reference rate, such as interbank lending rate, overnight policy rate and sovereign debt rate, is used in investment decision and monetary policy tool. With the development of Islamic financial system, there is a consensus among Islamic finance and economic scholars that such reference rate obtained in non-Islamic financial system is inappropriate from the Islamic perspective. Many agree that such reference rate should be derived from the real sector of economy. In the conventional financial system, the financial market dominates the role of real sector, in such a way that pricing benchmark is based on the financial market variables rather than those of real sector. Because the financial market is highly related to the problem of using fiat money, the pricing of asset does not reflect the intrinsic value of the asset. Thus, this study proposes nominal GDP growth rate as an alternative measure of reference rate for Malaysia which is representative of the real sectors of the economy. Key words: Asset pricing, reference rate, money supply, Islamic finance and economics.

This paper examines the relationship between ownership structure (cash flow/voting rights and type of ultimate controlling party), monitoring mechanisms (audit committee and substantial shareholding), various measures of earnings quality and the cost of equity as a form of market assessment of information risk. There is no evidence that ownership structure affects earnings quality and the cost of equity. However, the significant association between substantial shareholding and both earnings quality and cost of equity suggests that substantial shareholding plays a monitoring role. Substantial shareholding has also a role in increasing information flow to the public i.e in reducing information risk and thus is priced by the market. In contrast, the market seems to be indifferent with the rule based mechanism of audit committee. The results suggest that companies just about satisfy the minimum requirement for audit committee whose monitoring role is not evident. This has an important implication on the relative emphasis given by regulators on market and rule based mechanisms.

Islamic banks operate in a different manner from conventional banks, particularly in adopting profit loss sharing contracts, resulting in arguably different risks and profitability profiles. Drawing from the Islamic principle of full disclosure, stakeholder and signalling theories, this research examines whether there is a relationship between risk, profitability measures and the level of risk disclosure. Using a sample of Islamic banks in Asia, the Middle East and Europe for the period between 2006 and 2009, the results from a panel data analysis confirm a positive association between return on equity and risk disclosure. There is modest evidence of a negative association between risk (as measured by leverage and proportion of loan to total asset) and risk disclosure. The results generally support the signalling theory rather than the stakeholder theory. A major policy implication is that risk disclosure should be mandatory as voluntary disclosure cannot be expected.