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    Characteristics of Non-Audit Services and Financial Restatements in Malaysia

    209522_209522.pdf (606Kb)
    Access Status
    Open access
    Authors
    Abdul Wahab, Effiezal Aswadi
    Gist, W.
    Abdul Majid, W.Z.
    Date
    2014
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Abdul Wahab, E.A. and Gist, W. and Abdul Majid, W.Z. 2014. Characteristics of Non-Audit Services and Financial Restatements in Malaysia. Journal of Contemporary Accounting and Economics. 10 (3): pp. 225-247.
    Source Title
    Journal of Contemporary Accounting and Economics
    DOI
    10.1016/j.jcae.2014.10.001
    ISSN
    1815-5669
    School
    School of Accounting
    Remarks

    NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Contemporary Accounting and Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Contemporary Accounting and Economics, Vol. 10, no. 3 (2014). DOI: 10.1016/j.jcae.2014.10.001

    URI
    http://hdl.handle.net/20.500.11937/16454
    Collection
    • Curtin Research Publications
    Abstract

    Various types of purchased non-audit services (NAS) and their recurring nature affect the likelihood of financial statement restatements in Malaysia. Based on 953 firm-year observations during the period 2007–2009, evidence of a negative relationship between non-audit fees and financial statement restatements is provided. The purchase of both tax-related and audit-related NAS decreases the likelihood of restatements. Recurring (as opposed to non-recurring) tax-related and audit-related NAS are negatively and significantly related to the likelihood of restatements. These findings support our hypothesis that both types of NAS and their recurrence provide knowledge spillover, which enhances audit and financial reporting quality. When considering institutional settings, we find that politically connected firms are more likely to require financial restatements than non-politically connected firms, while audit committee independence and the purchase of tax-related, recurring tax-related and other NAS decrease this likelihood. The purchase of audit-related and recurring audit-related NAS and non-recurring other NAS decreases the likelihood of restatements for non-politically connected firms.

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