Conceptual Relationship between Corporate Governance and Audit Quality in Shari’ah Compliant Companies Listed on Bursa Malaysia

Nawal Kasim, Nur Ain Binti Hashim and Syed Ahmed Salman

Modern Applied Science, 2016, vol. 10, issue 7, 106

Abstract: The issue of corporate governance has been a focus among researchers after the 1997/98 financial crisis. Many countries have implemented codes and guidelines of corporate governance to promote effective boards overseeing the operations of companies. In the case of Shari’ah compliant companies, boards still play a significant role and are responsible to ensure Shari’ah compliance. This paper reemphasises the conceptual relation between corporate governance mechanisms and audit quality. The corporate governance mechanisms are measured by board size, CEO duality, independent directors, financial experts on the audit committee, and the existence of an internal Shari’ah committee. There are numerous methods to measure audit quality including using audit fee and auditor reputation as proxies. The findings are mixed. This means that there is no consistent relationship between good corporate governance mechanisms and audit quality.

Date: 2016
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