The Effects of Politically Connected Audit Committees on the Audit Process: Evidence in Malaysia

Jamil, Nurul Nazlia

doi:10.2139/ssrn.3241994

Cited by 2 publications

(2 citation statements)

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“…Prior literature reveals that a number of studies have examined the relationship between political connections and their impact on the improvement of corporate governance. A number of studies examine corporate political connections within a country, Fisman (2001) for the case of Indonesia, Johnson and Mitton (2003) and Jamil (2018) for the case of Malaysia, Ferguson and Voth (2008) and Niessen and Ruenzi (2010) for the case of Germany, and Agrawal and Knoeber (2000) for a sample of outside directors in the United States. A review of the literature reveals that a number of prior studies that have examined the relationship between political connections and their impact on the development of a firm's performance have extended to examination of the quality of accounting information (Ball et al 2003;Chaney et al 2011), of corporate bailouts for politically-connected firms (Faccio et al 2006), of the performance of connected firms (Johnson and Mitton 2003;Leuz and Oberholzergee 2006), of political favouritism in relation to access to finance (Faccio et al 2006;Mian and Khwaja 2004) and of the value of such connections (Fisman 2001).…”

Section: Political Connections and Audit Committeementioning

confidence: 99%

“…This aspect remains almost unexplored by researchers, because it is difficult to have access to both external auditors and internal auditors, and because their work remains confidential for strategic reasons (Neu et al 2013). This is necessary because role conflicts are at the core of their practices in planning the scope and plan of an audit (Vinten and Van Peursem 2005;Norman et al 2010;Jamil, 2018) and may have an impact on the roles that they ultimately play within the organisation (Roussy 2013).The paper tries to further explore to what extent political connections may influence the auditor's assessment process and what they are confronted with in their practice throughout the audit process. Nor do we know how they manage themselves when such conflicts happen.…”

Section: Corporate Governance Behaviour: Auditor's Assessment Processmentioning

confidence: 99%

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The Power of Political Connections: Review on the Impacts of Audit Committee and Corporate Governance

Jamil¹

2020

JPAG

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In this paper, the study summarizes the major studies addressing on the power of political connections that have impacts on the role of audit committees and corporate governance in the companies. The question addressed by this paper is how the political connections and audit committee role may influence the corporate governance variables as reflected in audit fees and corporate governance behavior through auditor’s assessment process. This is what has been lacking in the literatures.This paper is an attempt to identify the gaps and contribute to the political connections and corporate governance literature by showing the political connection influences on audit committee especially in an economy in which the government has coercive power in the firms. In the different context, the paper provides avenue to potential research to understand firm’s agency conflicts between the majority shareholder and the management as well as political connections that providing external resources to the firms affect auditor’s decision on audit fees, audit plan and assessment process and audit opinions.

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Section: Political Connections and Audit Committeementioning

confidence: 99%

Section: Corporate Governance Behaviour: Auditor's Assessment Processmentioning

confidence: 99%

The Power of Political Connections: Review on the Impacts of Audit Committee and Corporate Governance

Jamil¹

2020

JPAG

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Audit committee characteristics and financial restatement incidence in the emerging market

Hasnan¹,

Eskandar²,

Hussain³

et al. 2022

CBSR

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This paper discusses issues concerning audit committee characteristics that lead to the occurrence of financial restatements in Malaysian public listed companies (PLCs). The audit committee characteristics were measured using size, independence, frequency of meetings, audit tenure, gender, expertise, age, ethnicity, legal qualifications, and political connections. The data in this study were extracted from the annual reports of 100 firms that had restated their financial statement between 2006 and 2015, and a total of 200 non-restatement firms were matched and observed as control firms. Using univariate and multivariate statistical analysis, the results evince that there is a significant association between audit committee size and frequency of meetings as well as ethnicity and political connections of the audit committee members and the occurrence of financial restatements in Malaysian PLCs. However, the remaining audit committee characteristics show insignificant association with the occurrence of financial restatements. Consistent with Wan Mohammad, Wasiuzzaman, and Nik Salleh (2016), the results show that larger and more rigorous audit committees can strengthen the monitoring role and consequently reduce the occurrence of financial restatements. In addition, the results evince that Malay members in the audit committee have widespread political connections, which negatively affect the decisions by the audit committee, thereby increasing the occurrence of financial restatements.

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The Effects of Politically Connected Audit Committees on the Audit Process: Evidence in Malaysia

Cited by 2 publications

References 43 publications

The Power of Political Connections: Review on the Impacts of Audit Committee and Corporate Governance

The Power of Political Connections: Review on the Impacts of Audit Committee and Corporate Governance

Audit committee characteristics and financial restatement incidence in the emerging market

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