The Malaysian Private Entity Reporting Standard (MPERS) Adoption and The Financial Reporting Quality: Evidence From Small and Medium Enterprises (SMES) in Malaysia

Abstract

The Malaysian Private Entity Reporting Standard (MPERS) is a latest reporting standard that replaces Private Entity Reporting Standard (PERS) and is only applicable to private entities. This study examines the relationship of MPERS implementation and the financial reporting quality: evidence from Small and Medium Enterprises (SMEs) in Malaysia since the adoption of MPERS in January 2016. It is expected to help relevant parties to understand the relationship between MPERS and financial reporting quality and provide additional knowledge to accounting practitioners. The findings of this study can attract the interest of relevant parties to set standards and SMEs in Malaysia and other countries. A total of 310 accounting practitioners participated in this study by answering a questionnaire in which they used and understood MPERS in the implementation of financial reporting. The research measurements are on the basis of the variables indicated in the literature review that affect the variables, and the study were analyzed using a correlation and linear regression. The finding shows that most SMEs had adopted MPERS for their financial reporting and MPERS have a positive linear relationship with the quality of financial reporting. For further research, it is therefore recommended to investigate the relationship between financial reporting quality which adopted MPERS with SME's failure rate.