Factors that Drive Brain Drain of Accountants in Malaysia

Junaimah Jauhar, Yusliza Mohd.Yusoff, Khoo Mei Ying

School of Management, Universiti Sains Malaysia, 11800 Minden, Pulau Pinang, Malaysia
naimah@usm.my
yusliza1977@yahoo.com

Abstract: In this era of massive globalisation, resources of businesses are becoming more
and more mobile each day. Resources such as labour and other factors of production can be
obtained from any part of the globe with great ease. Thus, many businesses have increased
the mammoth search for cheaper labour of quality overseas to amplify their revenue
generation, as well as to stay ahead in the aggressive cut throat business arena. Some
companies have outsourced, some have imported foreign labours whereas some have
invested overseas to obtain this advantage. Meanwhile, some countries entice foreign
professionals or labours to fulfil the needs in their countries to avoid shortfalls.

This study examines the relationship between five independent variables (higher salary and
benefits program, improved standards of living and lifestyles, more promising job
opportunities and job scopes, international exposure, and ease of immigration procedures)
and phenomenon of brain drain among accountants in Malaysia. Data from a questionnaire
survey of 150 students and professional accountants in Penang, Malaysia, were analyzed
using regression analysis. The results indicated that higher salary and benefits program and
international exposure is positively related with brain drain. Contrary to expectations,
improved standards of living and lifestyles, more promising job opportunities and job scopes,
and ease of immigration procedures were unrelated with brain drain. Implications regarding
the value of conducting this study for students, researchers, and practitioners are discussed.

This research offers greater insight of this brain drain phenomenon to accounting firms.
Factors that cause brain drain have been identified and analysed and hence accounting
firms can now direct their effort to these factors to retain their accounting personnel. The
factors that have been assessed are "higher salary and benefits program", "more promising
job opportunities and job scopes", "international exposure" and "ease of immigration
procedures". Among all these factors, the firms should focus more on "international
exposure."

Keywords: Globalization, brain drain, accountants, Malaysia, international exposure,

factors of production

1 Research Background

In this era of massive globalization, resources of businesses are becoming more and more
mobile each day. Resources such as labour and other factors of production can be obtained
from any part of the globe with great ease. Thus, many businesses have increased the
mammoth search for cheaper labour of quality overseas to amplify their revenue generation,
as well as to stay ahead in the aggressive cut throat business arena. Some companies have
outsourced, some have imported foreign labours whereas some have invested overseas to
obtain this advantage. Meanwhile, some countries enticed foreign professionals or labours to
fulfil the needs in their countries to avoid shortfalls.

There has been much wailing and gnashing of teeth lately, especially in Malaysia, about the
harm globalization causes to workers, who are increasingly worried that their hard-learned
skills will become obsolete as their jobs are shipped overseas. Malaysia is facing a severe
brain drain in its workforce, especially in the area of skilled labor and professionals (The
Star, July 9, 2007). According to Asian Strategy & Leadership Institute director Tan Sri
Ramon V. Navaratnam, the loss of quality and skilled workforce was due to higher pay and
better perks offered by companies overseas (The Star, July 9, 2007). The debate on the
brain drain, or the emigration of skilled workers, is not new but it has taken on greater
urgency in the context of globalizing economy and ageing societies.

This phenomenon occurs in almost all sectors, including marketing, production, finance, as
well as engineering. In Malaysia, one sector that is badly affected is accountancy (New
Straits Times, September 8, 2007). It is evident that massive brain drain has been occurring
and this scenario has caused shortage of accountants in Malaysia. This can be justified by
the fact that Malaysia boasts of a large pool of highly qualified accountants who are able to
adapt and work with any races due to the multicultural origins and fluent in a few languages
as well. According to CPA Australia Malaysia Division president, Christina Foo said the
global shortage of accountants was a very real issue that cuts across a broad spectrum of
industries (The Star, May 15, 2008). In the latest survey by the Institute of Certified Public
Accountants of Singapore (ICPAS), 67% of the firms surveyed indicated that they are
sourcing for audit staff from Malaysia (34%), China (21%), Philippines (16%), Indonesia (9%)
and others (20%) like Australia, Hong Kong, India, etc
(http://www.channelnewsasia.com/cpasingapore/topchallenge.htm).

In August 27, 2007, news by the Global Malaysian Network highlighted that “By the time
Malaysia achieves its expected developed nation status by 2020; the country may have a
shortage of 60,000 accountants. The accounting industry is already feeling the pinch as
several countries are luring Malaysian accountants with salary offers of four times their
earnings here”
(http://globalmalaysians.com/news/story.asp?file=/2007/8/27/gmn/18683087&sec=GMN).

Furthermore, it was reported that the demand for skilled professionals from the field is on the
rise globally. Malaysia has witnessed a steady outflow of accounting experts to China, Hong
Kong, Singapore and, more recently, the UK (The Edge, January 22, 2007). Similarly, in a
more recent statement by Inland Revenue Department chief executive officer and director-
general Datuk Hasmah Abdullah, she said “the growing loss of Malaysia’s accounting
experts to China, Hong Kong, Singapore and the United Kingdom is an issue of critical
concern to our economy” (The Star, August 31, 2008). Thus, any loss of the skilled
accountants through migration may be prejudicial to the achievement of Vision 2020.

2 Research Motivation

Accountants are one of the biggest assets to companies. This is because accountants are
the ones responsible to manage a company’s cash flows and assets to ensure that the firm
can run smoothly and at the end of the term, reap substantial amount of profits. Besides,
accountants are also in charged to keep the companies legal by recording and keeping
financial statements of the firm. Now with more and more implementations of new rules and
regulations for financial statements to be made known to public investors, accountants are
more in demand than ever. Hence, the poaching trend of accountants everywhere, even in
Malaysia.

Developed countries have been attempting to lure accountants from Malaysia; experienced
as well as high quality fresh graduates to fill the gaps of accountant scarcity in their home
countries. These countries managed to convince Malaysian accountants to traverse the
globe and work there by promising higher salary and building a mental picture of how
wonderful life would be overseas. But, are these the only reasons that motivate Malaysian
accountants to opt for employment abroad?

At present, firms in Malaysia are already facing difficulties recruiting accountants due to this
phenomenon. As time passes by, ultimately, shortfall of accountants will emerge in Malaysia.
When the demand for accountants outweighs the supply in Malaysia, this will hamper the
booming industries and consequently firms will face problems managing the financial
records as well as staying in line with the accounting standards. In other words, this scenario
might bring an increase in the rate of corporate scandals in Malaysia. Besides, businesses
financial processes such as book keeping procedures will be more costly as the pay for each
remaining accountants in Malaysia will be increased. Companies will also have a hard time
in their stocks offering and maintaining investors’ relations because of the difficulties these
firms might face in the publications of their public investors financial statements. As a final
resort, Malaysian companies will have to source for foreign accountants.

3 Objective of the Study

Our primary aim is to uncover the important factors that influence brain drain among
accountants in Malaysia. Not much research has been conducted on factors that drive brain
drain of Malaysian accountants. In this study, brain drain is defined as the migration of
accountants in search of the better standard of living and quality of life, higher salaries,
access to advanced technology and more stable political conditions in different places
worldwide. Therefore, it is also our goal to expand the local literature available in this area.

4 Hypotheses Development

4.1 Higher Salary and Benefits Program and Brain Drain

Scientific management believed that money is the primary human motivator. Abraham
Maslow (Psychologist) developed his hierarchy of needs theory in the 1940s based on Henry
A. Murray's postulation that people attempt to satisfy their multiple needs (Murray manifest
needs) simultaneously rather than in some preset order. Maslow proposed a theory of
hierarchy of a set of five such needs. He arranged them as Physiological, Security, Social,
Esteem, and Self actualization needs. Each of these is related to one another and placed in
hierarchy. As per Maslow, once a need is gratified, it no longer motivates a person's
behavior. He emphasized that people move up the pyramid of needs as each level is
satisfied and could also move in a downward level if fulfillment of a lower order need is
threatened.

A survey of chemical engineers in Britain and America identified the top seven sources of
satisfaction and dissatisfaction. Money is important, of course, and in the survey, salary
ranked third among the sources of job satisfaction, behind interesting and challenging work
and personal fulfillment (The Chemical Engineer, 1993). In a similar vein, in a survey on
working conditions of public accountants, McCarthy (2000, p. 24) found that when asked
whether respondents would recommend a career in
accountancy to others, a number felt that there was "an inability to make sufficient money to
offset the hassles of life at the coal face".

Among the key findings for Malaysia of a recent survey which was completed in February
2009 of salary levels, bonuses, aspirations and the views by Watson Wyatt Malaysia on over
2000 CIMA students from the UK, Ireland, the Eurozone (including Ireland), South Africa, Sri
Lanka, Malaysia, India, Hong Kong and Australia is shown below:

 64% of CIMA students in Malaysia are planning to change jobs.

 Most Malaysian students will be seeking a new job within Malaysia. Overall 16% of
students plan to get a new job overseas during the coming year.
 Male students are more likely to wish to look for work abroad than women (22% vs
10%).
 Shown below is the average salary of accountants at the various levels in Malaysia and in
select countries where these Malaysian accountants intend to migrate.

MALAYSIA
Industry Specialization Position Exp. Salary Range
Accounting/Tax Services Audit & Taxation Audit 1 year MYR 1800 - 3600
Senior/Senior
Manufacturing/Production General/Cost Accounts Exec., 5 years MYR 2000 - 3200
Accounting Accounts Officer,
Accounts Asst
Manufacturing/Production General/Cost Accounts Exec. 5 years MYR 3000 - 5000
Accounting
Agriculture/Poultry/ General/Cost Accountant 3 years MYR 2000 - 4000
Fisheries Accounting
Property/ Real Estate Audit & Taxation Tax Assistant 1 year MYR 1500 - 2000
Manufacturing/Production Audit & Taxation Tax Manager 2 years MYR 3000 - 6000
Source: www.jobstreet.com

SINGAPORE
Industry Specialization Position Exp. Salary Range
Government/Defense General/Cost Accountant 3 years SGD 2800 - 3800
Accounting
Marine Offshore Oil & General/Cost Cost Assistant Classifieds SGD 3200 - 3500
Gas Accounting Accountant
Semiconductor General/Cost Group 5 years SGD 4500 - 5000
Accounting Accountant
Oil/Gas/Petroleum General/Cost Accountant 3 years SGD 3500 - 4000
Accounting
HR Mgmt/Consulting General/Cost Accountant 3 years SGD 3200 - 4200
Accounting
Law/Legal General/Cost Accountant 3 years SGD 4000 - 5000
Accounting
Source: www.jobstreet.com

UNITED KINGDOM
Report Summary

The Accountant working in United Kingdom, UK, All United Kingdom now earns an average annual salary
of 27,025. Half of those in this position would earn between 20,774 and 34,067 (the 17th and 67th
percentiles). These numbers are derived from real, area specific, survey data.

(Note: These are conservative government estimates. For competitive salary survey data based on consensus
analyses of thousands of private and public salary surveys, see ERI's Salary Assessor software. This salary
software covers Europe, Canada, and the United States.)

When benefits and bonuses are added to this salary, the average total compensation for this position would be
28,541. The report below also explains how the cost of living in this location affects the actual value of this
salary.

Estimates as of 29-Jul-2009.  Currency in British Pounds

Accountant | United Kingdom, UK, All United Kingdom

Low Average High Bonus Benefits
20,774 27,025 34,067 6.5% 5.6%
Total Compensation:   28,541
United Kingdom National Average
Low Average High Total Compensation
20,774 27,025 34,067 28,541
Source: http://www.salaryexpert.com/index.

Research into the working conditions and job satisfaction levels of public tax practitioners
has provided some interesting results, with many accountants being dissatisfied with their
work on a number of levels. Sources of dissatisfaction include salaries, excessive work
hours, lack of a clear career path and feeling undervalued in the work environment (Stedham
et al., 2002; Strawser et al., 1999). Researchers suggest that dissatisfaction has a significant
impact on employee turnover, and is costly and disruptive (Clabaugh et al., 2000; Fisher,
2001; Hiltebeitel & Leauby, 2001). This has been well documented as a significant problem
in the profession for more than 20 years (Aranya et al., 1982; Bullen & Flamhotlz, 1985;
Fisher, 2001). Therefore, the following hypothesis can be stated.

H1: Higher salary and benefit programs will be positively related to brain drain of
Malaysian accountants.

4.2 Improved Standard of Living and Lifestyles and Brain Drain

Professional accountants emigrate in order to seek for better environment and improve their
standards of living in other countries. An increase in income level, higher standard of living,
and better lifestyle and economic opportunities such as education, health, and job
opportunities in metropolitan countries such as Australia, New Zealand, Canada and United
States are some of the pull factors that influence migration decisions (Reddy et al., 2004).
Accountants have better lifestyles abroad, specifically in London, because of shorter working
hours and more work-life balance (Cannon, 2008). Furthermore, Cannon surmised that the
family is also happier abroad because of the better education system for their children.

Hulme (2002) revealed that higher earnings potential and improved securities as well as
brighter future for the family are often taken into serious considerations. According to a
survey of 800 CPAs, too much or too little work, lack of control, extensive travel, and
frequent changes in job location or assignments are leading causes of on-the-job stress
(Anonymous, July 5, 1993) and will lead to brain drain among accountants. Hence, to
examine the relationship between improved standard of living and lifestyles and brain drain
of Malaysian accountants, the following hypothesis is surmised:

H2: Improved standard of living and lifestyles will be positively related to brain drain of
Malaysian accountants.
 4.3 More Promising Job Opportunities and More Challenging Job Scopes and Brain
Drain

The two-factor theory or motivator hygiene theory as it is also known was developed by
Frederick Herzberg and Associates. This theory portrays the different factors as the primary
causes of job satisfaction and job dissatisfaction. Hygiene factors are sources of job
dissatisfaction while motivator factors are sources of job satisfaction. Hygiene factors are
those factors associated with the job context or work setting, i.e., they relate more to the
environment in which people work than to the nature of the work itself. Motivator factors on
the other hand, are related to the job content, i.e., what people actually do in their work.

Expanded job scopes and career advancement are categorized as motivators. Adding the
satisfiers or motivators in the motivator factors to people's jobs is Herzberg's link to
performance. These factors include a sense of achievement, recognition, and responsibility.
According to Herzberg, when these opportunities are not available, low job satisfaction
causes a lack of motivation and performance subsequently suffers. This is where job
enrichment plays a key role.

To get a better picture of the exodus of many Malaysian accountants to pursue better job
opportunities and job scopes abroad, comparisons between opportunities and job
responsibilities in Malaysia and other “popular” countries should be looked into in detail.
Thus, job scopes in Malaysia, China/Hong Kong, Singapore and the United Kingdom have
been listed in the first part of the table below, followed by opportunities available in these
countries and the highlights of the jobs offered.

Due to the mammoth number of areas and industries an accountant can pursue a
profession; the focus of the table is merely on financial, accounting and consulting industry.
Moreover, this particular industry is of interest because this industry seems to have the most
cases of brain drain pointed out throughout the thesis paper.

Malaysia China/Hong Kong Singapore United Kingdom

Job scopes Fresh Graduate: Fresh Graduate: Fresh Graduate: Fresh Graduate:
(in general) -Preparing monthly, -Responsible for daily -Assisting in month-end -Providing significant
quarterly & annually accounting functions accounts closing analysis & reporting
accounts for clients -Preparing monthly -General administrative -Gaining understanding of
-Assisting firm in reports duties & assisting in business processes &
providing compliance & -Troubleshooting problem providing consultation to providing analytical
consultation services to areas of clients with the clients. reviews
clients assistance of a senior -Managing audit -Challenging & supporting
accountant assignments. current scenario to drive
better performance for
clients.
-Preparing monthly
accounts

Experienced/Chartered: Experienced/Chartered: Experienced/Chartered: Experienced/Chartered:

-Ensuring compliance to -Monthly reporting & --Formulating budgets & -Implementing financial &
all acts, regulations & analysis forecasts. accounting controls &
standards. -Improving & reviewing -Providing accounting policies
-Making appropriate processes advisory services -Maintaining & updating
recommendations to -Financial consolidation -Performing financial & taxes
positively impact the -Ensuring compliance variance analysis for -Liaising with clients, tax
businesses with standards, companies agents, bankers and so
-Responsible for regulations & statutory -Ensuring compliance to on.
 implementation of acts. all regulations, acts and -Ensuring compliance to
accounting policies -In charged of overall standards. all acts, regulations &
-Liaising with tax agents, financial processes -Regularly carry out key standards.
bankers and so forth. -Leading dynamic team of accounts reviews -Providing advisory &
-Monitoring day to day accountants -Implementing or consultation expertise to
operations and preparing -Implementing strategic suggesting tactical & help drive clients’
reports to showcase plans for growths strategic solutions to business performance
financial position clients for risk mitigation. -Budgeting, forecasting &
-Maintaining accurate -Implementing continual auditing
reporting records improvement in the -Mentoring & guiding
-Handling all areas of accounting infrastructure junior staffs
budgeting, taxes & audit -Preparation of annual -Consolidating &
reports & conducting preparing annual reports
financial reviews
-Liaise with auditors, tax
agents & bankers.

Area of PricewaterhouseCoopers: PricewaterhouseCoopers: PricewaterhouseCoopers: PricewaterhouseCoopers:

opportunities Advisory Advisory Advisory Assurance
Assurance Audit & Assurance Assurance Financial advisory
Tax Tax Tax Consulting
Internal Firm services Actuarial
Tax

Ernst & Young: Ernst & Young: Ernst & Young: Ernst & Young:
Advisory Advisory Advisory Advisory
Assurance Assurance Assurance Assurance
Tax Tax Tax Tax
Transactions Transactions Transactions Transactions
Core business Core business services Core business services Core business services
services/ndustry services Specialty(Japan business Specialty(Japan business Specialty(Japan business
services, Korea business services)/Industry services, Private
group)/Industry services services Equity)/Industry services

KPMG: KPMG: KPMG: KPMG:

Audit Audit Audit Audit
Advisory Tax Advisory Advisory
Tax Financial Advisory Tax Tax
services
Risk Advisory services

Deloitte: Deloitte: Deloitte: Deloitte:

Audit Audit Assurance & Advisory Audit
Firm Internal Firm Internal Chinese Services Group Consulting
Enterprise Risk services Enterprise Risk services Consulting Corporate Finance
Financial Advisory Financial Advisory Financial Advisory Tax
Consulting Consulting Japanese Services Group
Tax Tax Risk Intelligence
Tax

Others (clients merely Others(wide range of Others(wide range of Others(most accounting

include small-medium clients, both foreign & clients, both foreign & firms in United Kingdom
industries): local): local): are highly noted firms
Enhance Interest Beijing QQCPA Aberdeen Consulting Pte. with many branches
Consulting Sdn. Bhd.: Accounting Firm: Ltd.: around the country):
Business Start-up Audit & Assurance Accounting Outsourcing Smith & Williamson:
Outsourcing of Capital Verification Audit Assurance & business
Accounting services Specialized Accounting Bookkeeping services
 Financial Advisory
Tax
Investment Strategies
Project Financing
Regional Knowledge
Adrian Yeo & Co.:
Audit
Tax
Accounting
Business Advisory
Business Financing
Foreign Desk
Corporate Secretarial
services
Government Grant
Highlights PricewaterhouseCoopers:
“Getting started” training
Training & development
Ernst & Young:
International opportunities
Career development
KPMG:
Learning & development
Global opportunities
Deloitte:
Learning & development
Global opportunities
Others:
Enhance Interest
Consulting Sdn. Bhd.:
None
Adrian Yeo & Co.:
Asset Valuation
Tax
Project Costing
Agency services
Edwin Cheung & Siu HK
Accountants:
Offshore company
formation
Audit
Accounting
Tax consultancy
PricewaterhouseCoopers:
Global opportunities such
as Ulysses and Genesis
Park
On the job training
Ernst & Young:
International opportunities
Career development
KPMG:
Learning & development
Global opportunities
Deloitte:
Learning & development
Global opportunities
Others:
Beijing QQCPA
Accounting Firm:
None
Edwin Cheung & Siu HK
Corporate Secretarial
Company Formation
Singapore Incorporation
Internal Audit
Tax Compliance
Tax Filling
Payroll Outsourcing
Business Advisory
services
Natarajan &
Swaminathan Pte. Ltd.:
Audit
Tax
Consultancy
Incorporation
PricewaterhouseCoopers:
Global Opportunities such
as Ulysses and Genesis
Park
Training & development
Ernst & Young:
International opportunities
Career development
KPMG:
Learning & development
Global opportunities
Deloitte:
Learning & development
Global opportunities
Others:
Aberdeen Consulting Pte.
Ltd.:
None
Natarajan &
Audit
Corporate Finance
Personal financial
services
Forensic services
Fund Administration &
Host Management
Investment Management
Advisory Investment
services
Private Banking &
Treasury services
Restructuring & Recovery
Tax
Private Client Tax
services
Transactions
Haines Watts:
Audit & Accounting
Tax
Corporate Finance
Value Added Tax
Financial services
General Business
Services
Asset Finance
Expense Control
Controls & Assurance
Forensic Accounting
PricewaterhouseCoopers:
International
Opportunities
Training & development
Ernst & Young:
International opportunities
Career development
KPMG:
Learning & development
Global opportunities
Deloitte:
Learning & development
Global opportunities
Others:
Smith & Williamson:
Graduate Training
Haines Watts:
 None Accountants: Swaminathan Pte. Ltd.: Learning & development
None None

As shown in the first part of the table, job scopes of fresh graduate accountants do not vary
much between the countries selected. Most fresh graduate accountants carry out almost
similar tasks of preparing monthly financial statements, gaining understanding of business
activities, providing analytical reviews and consultation to clients and running daily
accounting routines. As for experienced and chartered accountants, the table shows slight
disparities between the job scopes of accountants in Malaysia, China/ Hong Kong,
Singapore and United Kingdom in general. A few companies in China/Hong Kong and
United Kingdom stated in the job advertisements that they require they experienced and
chartered accountants to lead, mentor and guide a team of junior accountants. Mr. Ong was
right when he mentioned in the interview that, in his opinion, job scopes rarely differ between
countries.

However, opportunities between these countries do not share the same fate. When the Big
Four accounting firms, namely PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte
were researched on, results illustrate that there are more areas of opportunities in the Big
Four firms abroad. For example, PricewaterhouseCoopers in Malaysia only offers services in
advisory, assurance and taxes, whereas in China/Hong Kong, this giant firm offers an extra
service of internal firm services. In United Kingdom, PricewaterhouseCoopers also provides
consultation and actuarial services, which are only available in this country. Let’s take a
good look at Deloitte, in Singapore, additional services such as Chinese Group services,
Japanese Group services and risk intelligence are provided. This scenario not only opens up
a wider window of opportunities for accountants, but also caters to the different areas of
interest of Malaysian accountants. Seeing that these areas of accounting are not made
available in Malaysia, accountants flee the country to pursue their interests. As mentioned by
Dewi and Cheah (2007), Yap, a Malaysian accountant was captivated by the abundance of
opportunities abroad. Ong (2001) and Cannon (2008) echoed that accountants yearn for
wider varieties of opportunities as it will be more likely for accountants to increase their areas
of responsibilities. By carrying out more tasks in different areas, Malaysian accountants will
grow professionally and enhance the chances of career progression.

Now, let’s turn our heads to the small and medium accounting firms in Malaysia, China/Hong
Kong, Singapore and United Kingdom. As not all accountants can build their careers in the
top accounting firms, it is imperative to take small and medium accounting firms into
account. Although the small and medium accounting firms in Malaysia, China/Hong Kong
and Singapore offers almost as many areas of opportunities, more of the small and medium
sized accounting firms in China/Hong Kong and Singapore deal with a wide range of both
local and international clientele. The small and medium accounting firms in Malaysia mostly
serve clients of small and medium industries. Accounting scene in the United Kingdom is
really impressive. From the research, it shows that most medium sized local accounting
firms are highly noted in United Kingdom and several have branches across the country.
Besides, there are also a wider range of areas of opportunities within the firms in United
Kingdom. According to Cannon (2008) and The Edge (2007), Malaysian accountants
decided to move abroad for more extensive, thrilling and sophisticated opportunities. To add
to that, when more areas of accounting are present, more job opportunities are present as
well.

Another important aspect when considering job opportunities or prospects is perks or

highlights that come with the jobs. For instance, PricewaterhouseCoopers offers global
opportunities through programmes such as Ulysses and Genesis Park. Outstanding
employees of the renowned PricewaterhouseCoopers are selected to undergo either one of
these programmes overseas to practice corporate social responsibility by reaching out
helping hands to communities in need. Through these programmes, employees stand a
chance to experience life abroad and doing something meaningful. However, programmes
such as Ulysses and Genesis Park are not carried out in the offices in Malaysia. Thus,
employees in Malaysia miss out on opportunities for international exposure. The only
common ground of highlights between offices in Malaysia, China/Hong Kong, Singapore and
United Kingdom are the training and development provided. Other than that, none of the
small or medium sized firms in Malaysia, China/Hong Kong and Singapore offers training or
so on. On the bright side, a handful of medium sized accounting firms in United Kingdom
help kick-start graduates’ careers with training and further develop experienced employees
with development programmes.

From the research, it can be summarized that besides the Big Four firms which are at the
top of their game, a big number of small and medium sized firms do not explain a clear
career pathway and do not organize programmes to support career progression, unlike the
firms in United Kingdom. It is crucial for these firms to lure potential job seekers with clear
career direction in their website. Unfortunately, most of the Malaysian small and medium
sized accounting firms do not discuss this or reveal any intentions for training to support
further learning. Hence, The Star (2007) hits bull’s eye by stating that the lack of
engagement and communication for career direction by Malaysian firms has caused
accountants to quit their jobs. To quote Dewi and Cheah (2007) again, Yap, the Malaysian
accountant has moved in chase of better job advancement as well. The Big Four firms and
the firms in United Kingdom encourage their accountants to pursue professional
qualifications to become chartered accountants with financial resources and development
activities.

Imm (2001) claimed that many Malaysians are not returning to home country because they
found that the jobs in foreign countries are more challenging. In line with this argument,
Malaysian accountant Kelvin Yap, who works in Britain, said while the higher salary was
enticing; it was more of the international exposure and greater opportunities that took him to
Britain
(http://globalmalaysians.com/news/story.asp?file=/2007/8/27/gmn/18683087&sec=GMN). He
further claimed that the job progression is good despite the general presumption that in
Britain, there exist glass ceilings for non-British professionals. Individuals have voiced out
that they moved to London to look for broader job opportunities (Cannon, 2008). According
to a study (Hulme, 2002) of chartered accountants who have left South Africa for foreign soil,
it is clear that the prospect for professional advancement is the most important consideration
for leaving the country. People moved from big companies in Malaysia to the United
Kingdom due to the opportunities of more sophisticated and exciting work projects in the
latter and Europe (The Edge, January 22, 2007). In addition, Bloom and Myring (2008) noted
that firms must understand the work related preferences of the accountants and try to offer
positions based on those criteria. Therefore, based on the foregoing statement, the following
hypothesis is postulated:

H3: More promising job opportunities and more challenging job scopes will be positively
related to brain drain of Malaysian accountants.

4.4 International Exposure and Brain Drain

Hulme (2002) found that chartered accountants who have left South Africa viewed the
international exposure as significant to their future growth. A recent survey by Telberg
(2008), 71 per cent of Chief Financial Officers in his study agreed that international
experience will be necessary for accounting and finance professionals in the next five years.
Owing to the rapid globalization of business and its impact on firms, acquisition of
employees with global management skills is becoming critical for international firms to
remain competitive (cf. Zahra et al., 2000). For instance, the international experience of
CEOs has been found to be related to firm performance such as return on assets, return on
investment, and market-to-book ratio (Daily et al., 2000). Because international assignments
play a central role in building global and international skills (cf. Sambharya, 1996; Tihanyi et
al., 2000), accountants experience at one point in one's career may also become a
necessary criterion for career advancement. As a result, there seems to be a trend toward
using international exposure for such developmental purposes among accountants.

Consistent with these findings, the following hypothesis on the relationship between
international exposure and brain drain is articulated:

H4: International exposure will be positively related to brain drain of Malaysian

accountants.

4.5 Ease of Immigration Procedures and Brain Drain

Lastly, the ease of immigration procedures increases the likelihood of emigration of

accountants. Kapur and McHale (2006) highlighted that one of the central drivers of greater
ease in immigration is policies implementation of skills-focused immigration. Developed
countries target on highly potential individuals that can facilitate in market expansions. Kapur
and McHale further added that Germany put in place a "green card" program to offer
temporary visas for skilled workers, and also offered new opportunities for permanent
migration. In a similar vein, Irish firms have entered staff sharing arrangements with their
global partnership’s firms in other countries because attracting Irish accountants back home
is not enough to fill the job vacancies (Canniffe, 2006). Immigration procedures in Singapore
are also friendlier and workers are walked through immigration regulations rapidly in order to
draw experts in (The Edge, January 22, 2007). Thus, Malaysia need to improve or
deregulate the immigration rules to allow talent accountants inflow. Therefore, based on the
foregoing evidence and assertions, the following hypothesis is:

H5: Ease of immigration procedures will be positively related to brain drain of Malaysian
accountants.

5 Research Model

From the above-mentioned discussion, the research model developed for this study is
shown in Figure 1.

Higher salary & benefits program

Improved standard of living &

lifestyles

More promising job opportunities & Brain drain of Malaysian

more challenging job scopes Accountants

International exposure

Ease of immigration procedures

6 Methodology
6.1 Research design and sampling

Participants in the research were the accounting students from Universiti Sains Malaysia as
well as other local colleges. Besides that, fresh accounting graduates and experienced
accountants were target respondents in this study. The participants who answered the
questionnaire came from Penang. Sample of this research was taken randomly to
understand the factors that drive brain drain of Malaysian accountants. A field study was
conducted from the actual environmental conditions in collecting the primary data. A survey-
questionnaire approach was used to gather data in this study. Only 150 survey forms were
printed, distributed and collected.

6.2 Measurements

Higher salary and benefits program was measured with the three-item measure taken from
Canniffe (2006). Improved standard of living and lifestyles was tapped by Cannon (2008)
three-item scale. More promising job opportunities and job scopes was measured by three
items, taken from Imm (2001). Three items were used to measure the international exposure
(Hulme, 2002). Ease of immigration procedures was measured by using the three-item scale
adapted from The Edge (January 22, 2007). The phenomenon of brain drain was assessed
using a three-item of opinions of working abroad scale described by Wickramasekera
(2002). These items in the questionnaire were rated on a seven-point Likert scale ranging
from 1 = strongly disagree to 7 = strongly agree.

7 Findings

7.1 Profile of the Respondents

More than half of the respondents were in the age group of 20-25 years old (58.8%),
followed by 26-35 years old (29.3%), 36-45 years old (11.3%), and 46 and above (1.3%).
About 57.3 per cent of the total respondents were females, 27.3 per cent were Malays, 54.7
per cent were Chinese, 12.0 per cent were Indians, and only 6.0 per cent were other races.
Majority (76.7%) of the respondents were single. A high percentage (60.6%) of the
respondents were unemployed which includes 47.3 per cent are accounting students and
13.3 per cent fresh accounting graduates. About 39.3 per cent were practising accountants.
In terms of range of salary, 37.3 per cent were in the salary range of between RM2, 500 and
RM5, 000, followed by the range of less than RM2, 500 (16.7%), and only 2.0 per cent in the
range of more than RM5, 000.

7.2 Means, standard deviations, reliability, and correlations between all study variables

A summary of the means, standard deviations, reliability, and correlations is provided in

Table 1.

Table 1. Descriptive statistics, reliability, and correlations

Mean S.D. 1 2 3 4 5 6
1. Higher salary &
5.64 0.74 (0.63)
benefits program
2. Improved
standards of 5.30 0.88 0.45** (0.73)
living & lifestyles
3. More promising
job opportunities 5.33 0.77 0.50** 0.52** (0.66)
& job scopes
4. International
5.36 1.06 0.43** 0.44** 0.35** (0.83)
exposure
5. Ease of
immigration 4.76 1.10 0.32** 0.21** 0.16* 0.40** (0.81)
procedures
6. Brain drain 5.40 1.09 0.47** 0.38** 0.32** 0.56** 0.29** (0.77)
Note: Scale reliabilities are shown in parentheses on the diagonal; **p<0.01; *p<0.05

It can be seen that the mean value for each of the study’s variables ranges from 4.76 to
5.64, with a standard deviation of 0.74 to 1.10. It revealed that all variables chartered higher
than the midpoints of their respective scales. To assess reliability among the study’s
variables, Cronbach’s alpha values were generated. Nunnally (1978) proposed 0.70 to be
the minimum acceptable standard for internal consistency. However, reliabilities of 0.40 are
acceptable when there were only two or three items (Hinkin, 1995). The six corresponding
alpha values ranges from 0.63 to 0.83. Hence, it can be concluded that these measures
posses sufficient reliability.

According to correlations between variables, results show that the correlations among the
independent and dependent variable were positive and significant (p < 0.01). The values of
the correlation were 0.29 (ease of immigration procedure), 0.32 (more promising job
opportunities and job scopes), 0.38 (improved standards of living and lifestyles), 0.47 (higher
salary and benefits program), and 0.56 (international exposure) with the brain drain.

7.3 Hypotheses testing

The results of the tests of effects of independent variables and dependent variable are
presented in Table 2.

Table 2. Regression results between independent variables and brain drain

Variables Standardized Beta t-value
Higher salary & benefits program 0.27 3.21**
Improved standards of living & lifestyles 0.05 0.57
More promising job opportunities & job scopes 0.02 0.25
International exposure 0.41 5.03**
Ease of immigration procedures 0.00 0.10
R² 0.37
Adjusted R² 0.35
R² Change 0.37
F Value 16.93**
**p<0.01; *p<0.05

The results of the regression analysis undertaken to test the hypotheses of this study is
shown in Table 2. When the five variables were entered into the regression equation, the
coefficient determination (R²) was found to be 0.37 indicating that 37 per cent of brain drain
is explained by independent variables. The R² change (0.37) is significant. Results revealed
that high salary and benefits program (ß = 0.27, p < 0.01) and international exposure (ß =
0.00, p < 0.01) had significant and positive effects on brain drain. Based on these results,
there is clear support for hypothesis H1 and H4. Contrary to the expectation, hypothesis H2,
H3, and H5 were rejected due to insignificant findings.

8 Discussion

The purpose of the present study was to determine the effects of independent variables
(higher salary and benefits program, improved standards of living and lifestyles, more
promising job opportunities and job scopes, international exposure, and ease of immigration
procedures) on phenomenon of brain drain among students and accounting professionals in
Penang.

The findings of the present study confirmed that higher salary and benefits program was
positively related to brain drain. A possible explanation for this outcome is that a higher
salary and better benefits program was an important reason for accountants from Malaysia
to emigrate, where wages and benefits program are not as competitive as the other
countries (United Kingdom, Australia, Singapore, and China). It was understandably not an
important reason for accountants from these countries, where salaries and benefits program
are likely to be better than in Malaysia. This indicates that higher salary and competitive
benefits program are important reasons for deciding to work in other countries. In addition,
the findings that higher salary and benefits program were important reasons for many skilled
accountants from developing regions like Malaysia was consistent with the neoclassical
economic theory of international migration (Khoo et al., 2007). Besides, the explanation for
the positive effect of the benefits program on brain drain of Malaysian accountants is
provided by Locke (1983), who stated that the root of the desire for equitable benefit is the
individual’s desire to satisfy his or her physical needs or the basic necessities of life (food,
shelter and clothing). It could also mean the brain drain phenomenon. Similarly, money may
also serve as a symbol of achievement (McClelland, 1961), as a source of recognition, and
as means of obtaining other values (e.g., leisure, works of art, etc), and as a status symbol.

The effect of international exposure on brain drain was significant. Many scholars exploring
the phenomenon of people moving to other countries in order to find a job by themselves
created several typologies of employees to illustrate different patterns that characterize their
international exposure (Inkson & Myers, 2003; Suutari & Brewster, 2000). It might be said
that accountants with international exposure perceived themselves to be more marketable
than those without and that having acquired that experience they were better positioned for
career advancement. Thus, it is apparent that an international exposure for accountants has
an influence on the brain drain phenomenon among Malaysian accountants. In fact,
international experience schemes are becoming more popular, particularly among the
multinational companies operating in Ireland and, more especially as indigenous firms
internationalize (Monks, 1996).

9 Limitations

While this research makes a number of valuable contributions, it is not without limitations.
Firstly, there was a limited number of respondents (150 respondents) due to time
constraints. A large number of respondents would reflect a more accurate study. Also, the
respondents were limited to a target population (Penang). Secondly, self-report was used as
the source of all data for the measurement of independent and dependent variable
measures. The cross-sectional design of the study is the final limitation to the study. The
inherent problem in a cross-sectional study is that “although their conclusions are based on
observations made at only one time, typically they aim at understanding causal processes
that occur over time” (Babbie, 2001, p. 102). Thus, the ability to draw casual inferences is
limited. A longitudinal or experimental research design would help to strengthen causal
inferences. A longitudinal study focusing on changes within the organization over time may
provide stronger evidence of the unidirectional relations proposed in this study.

10 Conclusion

In conclusion, this study has shown that higher salary and benefits program and international
exposure are positively related to the brain drain phenomenon among Malaysian
accountants. Contrary to expectations, improved standards of living and lifestyles, more
promising job opportunities and job scopes, and ease of immigration procedures were not
significantly related to brain drain. On this basis, this study is a first step towards
understanding the factors that drive the brain drain phenomenon among Malaysian
accountants. Based on the results of this study, it seems clear that these variables should
continue to be a central focus of future research in this field.

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