The paper is on Malaysia, an emerging market, which had enjoyed strong economic activity with growth of 8-9% p.a. for a decade before the Asian financial crisis hit the\ud
region in 1997. The local currencies in the region came under pressure as capital took flight from the region. Credit and trade receivables became difficult. Assets and share values plunged dramatically as demand fell. A number of companies which had expanded rapidly through acquisitions and diversification with heavy borrowings in\ud
the past became insolvent. Investors and other stakeholders lost money with the failure of the companies. Many blamed the inadequate financial information and poor corporate governance as agency issues for their loss.\ud
Using the data of companies with poor earnings that were subsequently placed on the\ud
KLSE PN4 list, the study confirmed previous studies that earnings affect share prices.\ud
The share prices fell with negative earnings and remained low with declining earnings up to the PN4 announcements in 2001. Earnings management was evidenced by the use of the statistical model and the high standard deviation. There was, however, a marked change in 2005. Good management practices and transparency in financial information promotes growth