The Use of Financial Distress and Financial Structure Ability as a Determinant of Financial Manipulations Level among Public Listed Companies in Malaysia

Financial manipulations are growing exponentially due to the dynamic complexities of businesses. This influenced a huge number of jobs and fund losses and renowned worldwide corporate scandals right from Health South and Freddie Mac, WorldCom, Cendant Corp and Tyco Scandals in 2002, Enron Scandal and Waste Management Scandal among others. However, if not detected early, and prevented, it could lead to a gradual loss of investor’s confidence. Therefore, this study examines the influence of financial distress and financial structure ability on financial manipulation level in the trading and service industry of Bursa Malaysia. This study employed secondary data from the annual reports of the selected companies listed in Bursar Malaysia under the trading and service industry. Hence, the study obtained the data sets from the year 2009 – 2018 as the investigation period. A total of 191 firms listed in the Trading and service industry on Bursa Malaysia were identified to be sampled in the current study. However after the elimination of delisted firms, it brought the total observation to 1490 firm years. The result of the multiple regression analysis for the financial structure ability indicate that the accounting information related to the financial structure ability was ascertained to be significant at 5% level indicating a significant relationship between financial structure ability and financial manipulation level. In addition, it also indicated a significant relationship between Financial Distress and the financial manipulation level among firms in the trading and service industry of Bursa Malaysia. The present study has provided important evidence of the conditions of the financial attributes in the companies which would usually have significant influence on the financial manipulation level in the companies. Therefore, the study suggested that the policy market should have a clear framework in the accounting reporting transactions in order to control the degree of financial manipulations in the companies.

KEYWORDS--- Financial manipulation level, Financial distress, Financial structure ability, Trading andService, Malaysia.