Title: Ethical practices and financial reporting quality in Malaysian SMEs: the perception of financial report preparers

Authors: Siti Faizah Zainal; Hafiza Aishah Hashim; Zalailah Salleh; Akmalia Mohamad Ariff; Nor Raihan Mohamad

Addresses: Department of Accounting, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia ' Department of Accounting, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia ' Department of Accounting, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia ' Department of Accounting, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia ' Department of Accounting, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Malaysia

Abstract: The study explores the ethical practices and the attributes of financial reporting quality among the Malaysian small and medium-sized enterprises (SMEs). The study employed phenomenological approach and purposive sampling with a face-to-face interview approach. Seven external accountants working for the Malaysian accounting firms have been interviewed. The Malaysian SMEs' financial reporting quality is determined by faithful representation and comparability from the view of the respondents. The ethical issues concerning in SMEs are financial report adjustment, lack of knowledge, and other issues were discovered during the interview. Additionally, ethical practises help SMEs achieve high-quality financial reporting in which it is useful for decision-making and improve their performance. Understanding ethical behaviour and discovering the importance of having high quality financial reporting in SMEs would be the foundation for future research, with the current study served as its fundamental and providing a more thorough grasp of the ethics and financial reporting quality in SMEs literature.

Keywords: ethical practices; small and medium-sized enterprises; SMEs; external accountants; preparers.

DOI: 10.1504/IJBGE.2025.144775

International Journal of Business Governance and Ethics, 2025 Vol.19 No.2, pp.226 - 244

Received: 09 Feb 2023
Accepted: 10 Apr 2023
Published online: 03 Mar 2025 *

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