Political connections: A threat to auditor independence?
MetadataShow full item record
Purpose: The purpose of this paper is to examine whether political connections further impair auditor independence by investigating the relationship between non-audit fees and audit fees and as to whether political connections moderate such relationship. Design/methodology/approach: This study employs panel regression analysis. The panel data set consists of 379 firm-year observations for three years from year 2001 to 2003. Findings: Based on 379 firm-year observations for the period of 2001-2003, grounded on two proxies of political connections namely politically connected firms and the proportion of Bumiputras directors, the authors find a positive and significant relationship between non-audit fees and audit fees, and the relationship becomes weaker, only for Bumiputra-dominated firms connected firms. Originality/value: This study contributes to the extant literature by examining the role of political connections in the context of auditor independence. In addition, this study is conducted in Malaysia, which provides a unique institutional environment with the existence of political connections that is built on ethnic grounds.
Showing items related by title, author, creator and subject.
Abdul Wahab, Effiezal Aswadi; Zain, M.; James, K. (2011)Purpose – The purpose of this paper is to examine the relationship between political connection,corporate governance and audit fees in Malaysia. Specifically, it is argued that politically connectedfirms are perceived to ...
Abdul Wahab, Effiezal Aswadi; Gist, W.; Abdul Majid, W.Z. (2014)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 ...
Political Connections, Fees Paid to Auditors and Auditor Independence in Malaysia: Evidence From Going Concern Audit OpinionsAbdul Wahab, Effiezal Aswadi; Zain, M.; Rahman, R. (2013)This study examines whether auditor independence will be affectedby the magnitude of audit and non-audit services fees provided to audit clientsand political connections. We predict that auditor independence will beundermined ...