Risk management committee, independent commissioner, and audit fee: An update

Rahayu, Nadia Klarita; Harymawan, Iman; Ekasari, Wulandari Fitri; Nowland, John

doi:10.1080/23322039.2021.1892926

Cited by 6 publications

(8 citation statements)

References 39 publications

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“…This means that having an independent risk management committee is related to higher audit costs. These results confirm our first hypothesis and previous results (Larasati et al 2019;Rahayu et al 2021). This can occur due to the company's internal control, in this case, RMC, which imposes external audit requirements (Hay et al 2006).…”

Section: Risk Management Committee Independent Commissioner and Audit Feessupporting

confidence: 91%

“…Secondly, we expand prior literature that documents the relationship between RMC and audit fees to be dominated by the characteristics of a firm's governance mechanism. Both of Larasati et al (2019) and Rahayu et al (2021) studies found that independent audit committee and commissioners influence the relationship between RMC and audit fees. Our study is taken auditor size as interaction variable to test whether auditor characteristics is also has influence on the relationship mentioned before.…”

Section: Introductionmentioning

confidence: 99%

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Risk Management Committee, Auditor Choice and Audit Fees

Harymawan

Prabhawa

Nasih

et al. 2021

Risks

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We find that risk management committees and BIG4 audit firms contribute to audit fees. We use observations of 895 companies registered in Indonesia for 2014–2018, and to answer our hypothesis we used ordinary least squares analysis. The results show that BIG4 weakens the relationship between RMC and audit fees. Our study proves that higher demand for audit coverage will occur if there is a risk management committee within the company. As a result, audit fees increase. RMC may demand high-quality external guarantees, but the presence of BIG4 as a moderating variable reduces the relationship between the two variables. We assume that this can happen because auditors can work more efficiently if the company has an RMC, auditor(s) could indirectly reduce the risk because it is partially results from the performance of the RMC. In addition, we also use the robustness test to handle the endogeneity problem with consistent results as OLS. These findings provide evidence for policy makers about the relationship between audit fees and risk management committees.

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Section: Risk Management Committee Independent Commissioner and Audit Feessupporting

confidence: 91%

Section: Introductionmentioning

confidence: 99%

Risk Management Committee, Auditor Choice and Audit Fees

Harymawan

Prabhawa

Nasih

et al. 2021

Risks

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“…Consistent with the previous literature, we measure the dependent variable, audit fees ( AFEE ), using the natural logarithm of audit fees paid to the external auditor (Bryan and Mason, 2020; Hay et al ., 2008; Nelson and Mohamed-Rusdi, 2015; Rahayu et al ., 2021).…”

Section: Methodsmentioning

confidence: 99%

“…5.2.2 Dependent variableaudit fees. Consistent with the previous literature, we measure the dependent variable, audit fees (AFEE), using the natural logarithm of audit fees paid to the external auditor (Bryan and Mason, 2020;Hay et al, 2008;Nelson and Mohamed-Rusdi, 2015;Rahayu et al, 2021) (Petersen, 2009) to minimize heteroscedasticity issues. Before analysing the data, we winsorized our continuous variables at the 1 and 99% levels to minimize the influence of outliers (Elghuweel et al, 2017).…”

Section: Military Directors and Audit Feesmentioning

confidence: 99%

Military directors and audit fees

Harymawan

Wardani

Nowland

2023

JAEE

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PurposeThis study investigates the relationship between companies with military directors and audit fees in Indonesia.Design/methodology/approachUsing upper echelon and audit pricing theories, the authors examine military directors' roles in the demand for and supply of auditing services. The authors use Indonesia as their research setting as their military forces have a long history of involvement in business. The study sample includes 898 firm-year observations on the Indonesia Stock Exchange during 2014–2018.FindingsThe authors find a negative relationship between military connections and audit fees. This is consistent with auditors assessing lower audit risk and charging lower audit fees to companies that have leaders with military experience. The study findings are strongest where there is military experience on the board of directors and where the military experience is from the Army.Originality/valueThis study extends the literature on the benefits of military experience in company leadership, especially in the context of auditing research. The study findings also have implications for the selection of board candidates and auditor risk assessments.

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“…The results show that, generally, the more layers of the pyramid, the more audit fees the company pays; This relationship is weaker in state-owned enterprises than in non-state-owned enterprises. Rahayu et al (2021) used 720 observations of Indonesian listed companies from 2015 to 2018, found that the existence of a Risk Management Committee (RMC) increases audit fees; however, the ratio of independent commissioners weakens the relationship between RMC and audit fees. Prabhawa and Nasih (2021) used 656 observations from companies listed on the Indonesia Stock Exchange from 2010 to 2018 and found that the intangible assets of a company will have a positive impact on audit fees, and the RMC strengthened the relationship between these two variables.…”

Section: Literature Reviewmentioning

confidence: 99%

Accounting Information Consistency and Audit Fees: Evidence from China

Fan,

Zhang

2023

AAMJAF

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This article uses the financial data of China’s A-share listed companies from 2007 to 2020 and examines the impact of accounting information consistency on audit fees. The study finds that higher consistency is significantly associated with a firm’s lower audit fees after controlling for other factors. After the robustness test, the conclusion remains unchanged. The mechanism test finds that higher consistency reduces audit risks and thus reduces the company’s audit fees. Further research finds that the reducing effect of consistency on audit fees is significantly more apparent in companies with higher financial leverage. Overall, this article expands the research on the influencing factors of audit fees from the consistency perspective. The research conclusions have reference value for information users to use accounting information to supervise governance, improve the quality of financial statement disclosure, and reduce the company’s audit fees.

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Risk management committee, independent commissioner, and audit fee: An update

Cited by 6 publications

References 39 publications

Risk Management Committee, Auditor Choice and Audit Fees

Risk Management Committee, Auditor Choice and Audit Fees

Military directors and audit fees

Accounting Information Consistency and Audit Fees: Evidence from China

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