The Effect of Information Asymmetry and Environmental Uncertainty on Earnings Management Practices among Malaysian Technology-Based Firms

This study examines the factors influencing firms to practice earnings management. Specifically, this study examines the effect of information asymmetry and environmental uncertainty on earnings management practices among technology-based firms listed in Bursa Malaysia. Using the annual reports of 83 firms over a period of two years from 2011 to 2012, this study found no significant relationship between information asymmetry and uncertainty environment on the occurrences of earnings management among the firms. Such results indicate that these two factors are not important factors for decision-making. The findings in this study contribute to the users of financial reports particularly the stakeholders in defining the determinants of earnings management practices among firms when it comes to decision-making.