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    Political connections: A threat to auditor independence?

    240345.pdf (320.9Kb)
    Access Status
    Open access
    Authors
    Abdul Wahab, Effiezal Aswadi
    Jain, M.
    Rahman, A.
    Date
    2015
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Abdul Wahab, E.A. and Jain, M. and Rahman, A. 2015. Political connections: A threat to auditor independence? Journal of Accounting in Emerging Economies. 5 (2): pp. 222-246.
    Source Title
    Journal of Accounting in Emerging Economies
    DOI
    10.1108/JAEE-03-2012-0013
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/45797
    Collection
    • Curtin Research Publications
    Abstract

    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.

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