Market Response To Public Reprimand Announcements In Malaysia

Abstract

An international study conducted by the Political and Economic Risk Consultancy (PERC) in 2010 placed Malaysia in the group of countries with the highest number of accounting irregularities. The issue of accounting irregularities is of interest to Malaysian regulators. Every year, Bursa Malaysia carries out enforcement proceedings and actions in relation to contravention of the Bursa Malaysia Rules and Bursa Malaysia Listing Requirements. When a company does not comply with the Bursa Malaysia Listing Requirements, it will be denounced in a public reprimand and fined. The main objective of this study was to examine the stock price reaction to public reprimand announcements. It also studied the impact of public reprimand announcements on stock market reaction. This study expected a negative reaction in stock price when firms receive a public reprimand announcement.