Do Political Connections Affect the Role of Independent Audit Committees and CEO Duality? Some Evidence from Malaysian Audit Pricing
Bliss, M.A., Gul, F.A., Majid, A. 2011. Do Political Connections Affect the Role of Independent Audit Committees and CEO Duality? Some Evidence from Malaysian Audit Pricing, Journal of Contemporary Accounting and Economics 7, 82-98.
Posted: 1 Sep 2018
Date Written: 2011
This study examines whether political connection to firms affects the association between audit committee independence and demand for higher quality audits. In line with Carcello et al. (2002), our findings show that there is a positive association between audit committee independence and audit fees thus supporting the hypothesis that more independent audit committees demand higher audit quality. However, we find that this relationship is weaker for politically connected (PCON) firms suggesting that the independence of audit committees in Malaysian PCON firms may be compromised. Additionally, we provide evidence that PCON firms that have CEO duality are perceived by audit firms as being of higher risk than CEO duality firms without political connection.
Keywords: Political connection, Audit committees, CEO duality, Audit fee pricing
JEL Classification: D72, G34, M42
Suggested Citation: Suggested Citation