17th Pacific Rim Real Estate Society Conference - Do Clients Influence Valuations Carried Out For Financial Reporting Purposes? Some Evidence from Malaysia

Sep 4, 2026

Uploaded by Cipher

Prior empirical studies show valuers may face pressure from clients that can bias valuation outcomes. Building on this work, the paper investigates the extent of client pressure and influence on financial reporting valuations prepared by listed property companies and REITs in Malaysia. Nineteen one-to-one semi-structured interviews analyze motivation and means of influence, along with the roles of valuer liability, integrity, and valuation method.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages37

Reading Time1 h 33 min

AccessFree to download

Abstract

Introduction

Client influence on valuations

Methodology and key findings

Conclusion

17th PACIFIC RIM REAL ESTATE SOCIETY CONFERENCE Do Clients Influence Valuations Carried Out For Financial Reporting Purposes? Some Evidence from Malaysia Kamalahasan Achu School of Real Estate & Planning Henley Business School University of Reading Whiteknights, Reading, RG6 6UD, UK [k.achu@rdg.ac.uk](k.achu@rdg.ac.uk) Key words: client influence, financial reporting valuation Abstract Prior empirical studies indicate that valuers can be subject to pressure and influence from their clients to bias valuation outcomes (Smolen and Hambleton, 1997; Levy and Schuck, 1999; 2005; Baum, et al., 2000; Crosby, et al., 2009). Much of these findings have been based on valuations prepared for lending and performance measurement purposes. Building on this research, this paper examines the extent of client pressure and influence on valuations prepared for financial reporting by listed property companies andREITs in Malaysia. Malaysia provides a different perspective to the existing literature which has been mainly supported by findings from developed markets. Nineteen one-toone semi-structured interviews with the users and providers of the valuation service were analysed in order to investigate issues related to the motivation and means for client influence in the financial reporting valuation. Preliminary analysis suggests that clients have strong reasons to pressurise valuers considering there are financial and tax implications to the company. However, clients claim that the main reason for their interference in valuation is related to their superior knowledge about the subject property and therefore they expect valuers to meet their value targets. Valuers maintain that they aware of clients’ strategies to influence and have their own approach to cope with such influence. It is also discovered from the analysis that factors such as valuer liability, valuer integrity and method of valuation play an important role in the influence process. Introduction Property valuations play an important role in many aspects of business and corporate decision-making. The role of valuations in the commercial and residential lending sector is self-explanatory in that they underpin individual lending decisions. The Basel Committee on capital adequacy agreements have further emphasised the significance of valuations in the secured lending sector. Valuations also facilitate transactions in the direct and indirect investment markets considering the asset’s unique characteristics compared to other financial assets. Business entities need to value their properties regularly for bookkeeping whilst institutional investors seek valuations to assess the performance of their investment fund. Although valuations are required for other individual and statutory purposes, it is the estimation of market value which is highly relevant to the decision-making activities mentioned above. Considering the different purposes for which valuations are required, clients may have clear incentives to influence them. In fact, evidence suggests that there is a strong possibility that the part of apparent variances in value conclusions are possibly contributed by client influences (Roberts and Roberts, 1991). The situation in many ways resembles the issue of auditor independence which has generated a large body of empirical evidence in accountancy (DeAngelo, 1981; Pasewark and Wilkerson, 1989; Beattie, et al., 1999; Lee and Zhaoyang, 1998; Jenkins and Lowe, 1999; Reynolds and Francis, 2001; Felix et al., 2005) and equity analysis literatures (Siconolfi, 1992; Dugar and Nathan, 1995; Lin and McNichols, 1998; Michaely and Womack, 1999; Boni and Womack, 2002). Existing research in the area of client influence has documented the behaviour of clients in relation to financing and performance measurement valuations. However, the recent implementation offair value accounting on fixed and investment assets requires the need to revisit the influence issue from the perspectiv

FAQs

What does the paper study regarding valuations for financial reporting?

It examines how much client pressure and influence affect valuations prepared for financial reporting by listed property companies and REITs in Malaysia.

How was the evidence collected?

The study analyzes nineteen one-to-one semi-structured interviews with users and providers of the valuation service.

What factors influence the client-influence process according to the analysis?

The analysis highlights the importance of valuer liability, valuer integrity, and the method of valuation.

Sep 4, 2026

Uploaded by Cipher