THE FACTORS THAT HAVE INFLUENCED THE ADOPTION OF MALAYSIAN PRIVATE ENTITIES REPORTING STANDARDS (MPERS) FOR SMEs IN MALAYSIA

Abstract

This study aims to explore the factors that have influenced the adoption of Malaysian Private Entities Reporting Standards (MPERS) in Malaysia since 2016, to explore the costs and benefits to Malaysian SMEs of adopting the MPERS, and also to explore challenges and expectations exploring the perception of 15 accounting professionals representing SMEs in Malaysia. Findings indicate that education and professional training are influential factors in the way participants perceive the MPERS but tensions between education and training did come to the fore in the interviews. Legal and tax factors are also influential. However, participants did not discuss the role of tax or legal factors relating to the implementation of the standard in any depth. Further, findings also indicate that cultural factors play a significant role equal to external economic factors, which heavily influenced the Malaysian standard setter to adopt MPERS. Participants suggested that the initial (short-term) costs for the adoption of the standard outweigh the benefits, but that over the long term, the benefits outweighed the costs of the adoption of the MPERS. The findings also suggest that adoption increased the reliability of financial information to users while adoption of the MPERS provides confidence to foreign investors by providing a comparable accounting framework with other countries, which was seen by participants as one of the most prominent macro effects. This thesis is the first to explore factors that drove the Malaysian authorities to adopt the MPERS and contribute to the existing body of accounting literature. We argue that this study’s findings might be used as a solid basis for other similar contexts in Southeast Asia with similar cultural characteristics to Malaysia.

JEL: M10, M14, M20, M40, M41

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