Institutional investors, political connection and audit quality in Malaysia

Article

Wahab, Effiezal Aswadi Abdul, Zain, Mazlina Mat, James, Kieran and Haron, Hasnah. 2009. "Institutional investors, political connection and audit quality in Malaysia." Accounting Research Journal. 22 (2), pp. 167-195. https://doi.org/10.1108/10309610910987501
Article Title

Institutional investors, political connection and audit quality in Malaysia

ERA Journal ID19067
Article CategoryArticle
AuthorsWahab, Effiezal Aswadi Abdul (Author), Zain, Mazlina Mat (Author), James, Kieran (Author) and Haron, Hasnah (Author)
Journal TitleAccounting Research Journal
Journal Citation22 (2), pp. 167-195
Number of Pages29
Year2009
PublisherEmerald
Place of PublicationBingley, W Yorks. United Kingdom
ISSN1030-9616
Digital Object Identifier (DOI)https://doi.org/10.1108/10309610910987501
Web Address (URL)http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&contentId=1810902
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.

Keywordsauditor's fees; investors; Malaysia; organizations; political systems
ANZSRC Field of Research 2020500102. Business ethics
350208. Investment and risk management
350101. Accounting theory and standards
Public Notes

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Byline AffiliationsUniversity of Science, Malaysia
Multimedia University, Malaysia
School of Accounting, Economics and Finance
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