According to the Malaysian Treasury
Department Economic Report of 1999/2000, the country’s real rate of growth of GDP
decreased from 10 percent in 1996 to 27.40 percent in 1998, and it remained negative
until the first quarter of 1999. The economy only began to recover in the second quarter
of 1999. Since the economic downturn and market crash years are included in the sample
years, this paper is able to evaluate their effect on earnings management practices.