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PurposeThe purpose of this study is to examine the relationship between a firm's internal corporate governance characteristics and audit fees, and whether the external auditor perceives higher inherent risk when CEO duality is present. Additionally, it aims to examine whether having more independent directors on audit committee moderates the auditor's perceived inherent risk when CEO duality is present.Design/methodology/approachThe data used in testing the hypotheses consist of all the Malaysian public listed companies on the main board in terms of market capitalization non‐finance listed companies for year 2001. Multiple regression analysis is used to estimate the relationships proposed in the hypotheses.FindingsThe results show that the presence of CEO duality on the board, a proxy for board independence, is associated with higher audit fees and that this positive relationship is significantly weakened when the firm has a higher proportion of independent directors on the audit committee. These results suggest that auditors in their assessment of the inherent risk of a firm recognize that independent audit committees provide an important check to moderate CEO dominance in firms where CEO duality is present.Originality/valueIn this study, the effect of CEO duality and the independence of the board and audit committee are considered. The paper provides an important insight that having more independent directors on the audit committee moderates the auditor's perceived inherent risk when CEO duality is present following the new code of corporate governance introduced in Malaysia in the aftermath of the Asian financial crisis.

This study uses Malaysian data to examine whether institutional investors affect the association between firm performance and CEO compensation. Overall, we find that total institutional investor ownership has a negative effect on the positive association between firm performance and CEO compensation, which suggests ineffective monitoring. When the institutional investors are categorized into local and foreign, we find that the negative effect is driven by local institutional ownership, consistent with the argument that foreign institutional investors are associated with better monitoring. Our results provide new insights on the association between institutional investors and the CEO compensation-firm performance relationship in an emerging economy. JEL Classifications: G34; J33.

This paper investigates the perceptions of employees in Islamic banks and Islamic branches of conventional banks regarding practices and growth of Islamic banking in Pakistan. For this purpose, questionnaires were distributed to employees working in these banks. The results reveal that bankers in Islamic banks perceive that Islamic banking is in accordance with Shari'ah and Islamic principles. They hold positive perceptions regarding the practices, objectives and growth of Islamic banking and believe that banks and government are committed towards the development of Islamic banking in the country. Results also show that bankers are confident that Islamic banking will grow and expand in the country in future. The study suggests that the issue of availability of well-trained and skilled employees must be addressed by government and stakeholders for the sustainable growth of Islamic banking in Pakistan.

90 practicing auditors were given identical sets of financial statements except for the amount of contingent liability which was varied independently over three amounts of $50,000, $500,000, and $1 million Based on this information, they were to indicate on a 7-point rating scale anchored by 1 (little likelihood) to 7 (great likelihood), their likelihood of issuing an unqualified, i.e., clean, report. 65 useable responses were received. In accordance with the theory of tolerance for ambiguity, it was hypothesized that auditors who were rated on the MacDonald AT-20 scale as being intolerant of ambiguity would have less preference for an unqualified audit report at higher amounts of contingent liability than auditors who were rated as being tolerant of ambiguity. A between-subjects analysis of variance showed that the auditors' tolerance for ambiguity interacted with different amounts of contingent liability to affect the likelihood of their issuing an unqualified report. Implications in terms of auditors' avoidance of litigation by the client are also discussed.