Ownership structures influence on audit fee

Puat Nelson, Sherliza and Mohamed-Rusdi, Nurul Farha (2015) Ownership structures influence on audit fee. Journal of Accounting in Emerging Economies, 5 (4). pp. 457-478. ISSN 2042-1168

PDF Restricted to Repository staff only Download (237kB) | Request a copy

Abstract

Purpose : The purpose of this study is to investigate the association between corporate ownership structures and audit fees paid to external auditors by Malaysian companies listed on Bursa Malaysia. This study focuses on the extent of the auditor’s reliance on the client’s internal control inasmuch as the corporate ownership structures are varied, and, ultimately, affect the audit fees. Design/Methodology : This study applies the agency theory in formulating three hypotheses that guide the results analysis. By employing a multi regression model for a sample of 345 Malaysian companies listed on Bursa Malaysia, this study examines the relationship of ownership structure, namely, managerial ownership, foreign ownership and government ownership with audit fees using data for 2010. Findings : The results show a significant positive relationship between audit fees and firms with larger foreign ownership and government ownership but no significant relationship with firms with higher managerial ownership. This study contributes recent evidence concerning the relationship between corporate ownership structure and audit fees. Practical implications : The regulator may consider ownership structure on the standards or regulation setting in order to be practical and operationalized in line with the impact associated with different ownership structures. The practitioners may also design appropriate methodologies and procedures for the different ownership structures for high quality service and to standardize the risk mitigation process. Social implications : The ownership structures have different influences on the audit fees, as well as complexity of the firms and their profitability. Originality : The study looks upon certain percentages of ownership structures, and how they affects audit fees, firms complexity and profitability.

Item Type:	Article (Journal)
Additional Information:	3486/47463
Uncontrolled Keywords:	Ownership structure, audit fees, foreign ownership, managerial ownership, Government ownership
Subjects:	H Social Sciences > H Social Sciences (General) > H96 Public policy (General), Policy sciences H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Accounting
Depositing User:	Sherliza Puat Nelson
Date Deposited:	08 Jan 2016 11:24
Last Modified:	21 May 2018 09:59
URI:	http://irep.iium.edu.my/id/eprint/47463

Actions (login required)

View Item