CEO power and audit fees: Evidence from Malaysia

Tee, Chwee Ming

doi:10.1111/ijau.12166

Cited by 11 publications

(11 citation statements)

References 101 publications

(288 reference statements)

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“…Third, the incentive alignment hypothesis suggests that CEOs will act in the best interest of the shareholders when the former's interest is aligned to the latter's interest (Jensen and Meckling, 1976; Jensen and Murphy, 1990). For example, Tee (2019) finds a positive association between CEO's shareholding and firm performance.…”

Section: Resultsmentioning

confidence: 99%

Executive directors' pay-performance link and board diversity: evidence from high free cash flow and low-growth firms

Tee

2021

IJOEM

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PurposeThe purpose of this study is to examine whether board diversity can attenuate weaker executive directors' pay-performance link in high free cash flow and low-growth firms (HFCF_LGRW).Design/methodology/approachThis study employed the Malaysian dataset from 2005 till 2016 and the fixed-effect model to investigate the developed hypotheses. The two-stage least squares method (2SLS) is employed to mitigate endogeneity issues.FindingsThis study finds that a positive association between executive directors' pay and firm performance is weaker in HFCF_LGRW firms. However, board diversity, namely ethnic and gender diversity, can mitigate weaker executive directors' pay-performance link, indicating effective monitoring.Originality/valueThis study is among the first to reveal that executive directors' pay-performance link is weaker in firms with HFCF_LGRW growth, consistent with Jensen's (1986) free cash flow hypothesis. However, findings suggest that this agency problem in HFCF_LGRW firms is attenuated by board diversity, namely ethnic and gender diversity. This supports the notion that diversity in corporate boards serves as an effective internal monitor.

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Section: Resultsmentioning

confidence: 99%

Executive directors' pay-performance link and board diversity: evidence from high free cash flow and low-growth firms

Tee

2021

IJOEM

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“…The influence of CEO attributes such as shareholding, overconfidence, talent, age, tenure, founder and duality is well documented to be associated with various firm outcomes in previous studies (Bebchuk et al, 2011;Busenbark et al, 2016;Galema et al, 2012;Tee, 2019). In this study, the focus is only on CEO shareholding.…”

Section: Corporate Tax Avoidance Political Connections and The Influe...mentioning

confidence: 78%

“…Past studies have shown that CEO shareholding is positively associated with firm performance (Busenbark et al, 2016;Fahlenbrach & Stulz, 2009;Tee, 2019), and one of the main strategies to boost financial performance is by reducing tax liabilities paid by the firm. This is reported in previous studies where firms with higher CEO shareholding have been shown to be related to higher corporate tax avoidance, which is an effort to increase the firms' profitability, share price, and eventually the CEOs' compensation (Desai & Dharmapala, 2006.…”

Section: Corporate Tax Avoidance Political Connections and The Influe...mentioning

confidence: 99%

“…Further, previous literature suggested that the chief executive officer's (CEO) shareholding and institutional investors' monitoring do significantly influence various firm outcomes. First, the CEO is the most important person in the firm as the executive power vested in his/her hands enables him/her to determine the direction of the firm (Bebchuk et al, 2011;Tee, 2019). However, agency theory posits that the CEO (manager) can either act in the best interests of the shareholders (owners) or cause a severe agency problem to the firm (Jensen & Meckling, 1976;Jensen & Murphy, 1990).…”

Section: Introductionmentioning

confidence: 99%

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Political Connection Types and Corporate Tax Avoidance: Evidence from Malaysia

Tee

Teoh

Hooy

2022

MJES

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This study examines whether dissimilar types of politically connected firms (PCFs) are related to corporate tax avoidance. Additionally, it investigates whether this association is moderated by chief executive officer (CEO) shareholding and institutional ownership. Using the dataset of Malaysian public listed companies from 2002 till 2018, our findings suggest that PCFs are associated with higher corporate tax avoidance which is largely driven by older PCFs and government-linked companies (GLCs). Further analyses reveal that the association between older PCFs and GLCs and higher corporate tax avoidance is stronger in firms with higher CEO shareholding and institutional ownership.

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“…For example, Hu and Gan [19] noted that CEOs' greater structural power enhances the firms' internal control quality. Tee [59], in research focusing on the Malaysian context, mentioned that powerful CEOs boost the quality of accrual income. Also, Meo, Lara, and Surroca [1] and Seifzadeh, Rajaeei, and Allahbakhsh [60] identified an inverse tie between entrenched managers and income distortion.…”

Section: Ceos Structural Power and Earnings Qualitymentioning

confidence: 99%

Do powerful CEOs matter for earnings quality? Evidence from Bangladesh

2023

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This study investigates the effects of powerful Chief Executive Officers (CEOs) on earnings quality in a setting where CEOs have strong dominance over other top executives and occasionally attempt to exert their influence over corporate regulatory bodies. Using 10-year longitudinal data for the period from 2010 to 2019 and 1,395 firm-year observations from listed non-financial firms in Bangladesh, we found that CEOs’ political power and CEOs with high structural and expert power have a significant detrimental effect on earnings quality. Ownership and prestige power have an insignificant impact on earnings quality. These powerful CEOs use accrual and real activity manipulation techniques together to manage the earnings. This study uses the system-generalized method of moment estimates for estimation purposes, and the results remain robust when alternative earnings quality proxies are used. Taken together, our results suggest that CEOs’ political duality (i.e., serving simultaneously as a member of parliament and a CEO) should be restricted and that a CEO’s tenure should be limited to a reasonable period. This research adds to the existing body of knowledge by offering empirical support for CEO power dynamics on earnings quality, specifically political and prestige power.

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CEO power and audit fees: Evidence from Malaysia

Cited by 11 publications

References 101 publications

Executive directors' pay-performance link and board diversity: evidence from high free cash flow and low-growth firms

Executive directors' pay-performance link and board diversity: evidence from high free cash flow and low-growth firms

Political Connection Types and Corporate Tax Avoidance: Evidence from Malaysia

Do powerful CEOs matter for earnings quality? Evidence from Bangladesh

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