Political connections: a threat to auditor independence?

Effiezal Aswadi Abdul Wahab, Mazlina Mat Zain and Rashidah Abdul Rahman

Journal of Accounting in Emerging Economies, 2015, vol. 5, issue 2, 222-246

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.

Keywords: Audit fees; Non-audit fees; Political connections; G34; G38; M41; M42 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jaeepp:jaee-03-2012-0013

DOI: 10.1108/JAEE-03-2012-0013

Access Statistics for this article

Journal of Accounting in Emerging Economies is currently edited by Dr Shahzad Uddin

More articles in Journal of Accounting in Emerging Economies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().