Institutional investors, political connection and audit quality in Malaysia

Wahab, Effiezal Aswadi Abdul and Zain, Mazlina Mat and James, Kieran and Haron, Hasnah (2009) Institutional investors, political connection and audit quality in Malaysia. Accounting Research Journal, 22 (2). pp. 167-195. ISSN 1030-9616

Abstract

Purpose – The purpose of this paper is to extend the audit pricing literature by examining whether institutional investors and political connection are associated with higher audit fees. Design/methodology/approach – Both descriptive and multivariate analyses are employed to address the research objectives. In addition, the authors use panel data to control for both heterocedasticity and contemporaneous correlations in each cross-section. Findings – Based on a panel analysis of 390 Malaysian firms from 1999 to 2003, a positive relationship between institutional ownership and audit fees is found, although the economic impact is minimal. Further, the authors find that audit fees are higher for politically connected firms. Research limitations/implications – A thorough examination on the role of political connection is much warranted to provide a better understanding on such connection influences the audit market. Originality/value – This paper provides an alternative view on the role of political connection, and on how they influence the audit market.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Awaiting Author's version which may be deposited in accordance with the copyright policy of the publisher.
Depositing User: Dr Kieran James
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 02 Nov 2009 05:49
Last Modified: 02 Jul 2013 23:26
Uncontrolled Keywords: auditor's fees; investors; Malaysia; organizations; political systems
Fields of Research (FOR2008): 22 Philosophy and Religious Studies > 2201 Applied Ethics > 220102 Business Ethics
15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150101 Accounting Theory and Standards
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9102 Microeconomics > 910209 Preference, Behaviour and Welfare
Identification Number or DOI: doi: 10.1108/10309610910987501
URI: http://eprints.usq.edu.au/id/eprint/5908

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