Internal governance, structures, board ethnicity, and external audit fees of Malaysian listed firms

Yatim, Puan. (2006). Internal governance, structures, board ethnicity, and external audit fees of Malaysian listed firms PhD Thesis, School of Business, The University of Queensland.

       
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Author Yatim, Puan.
Thesis Title Internal governance, structures, board ethnicity, and external audit fees of Malaysian listed firms
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 2006
Thesis type PhD Thesis
Total pages 155
Language eng
Subjects 1503 Business and Management
150303 Corporate Governance and Stakeholder Engagement
Formatted abstract
      This thesis examines the association between external audit fees, and board and audit committee characteristics of 736 Malaysian listed companies. The thesis draws on the existence of a clearly identifiable ethnic domination of board membership and ownership of Malaysian listed firms. It is hypothesised that good corporate governance practices reduce auditors' risk assessments, resulting in lower external audit fees. The thesis also posits that Bumiputera-controlled firms pay higher audit fees partly because of their weaker governance practices.

      Overall, the results of this thesis reveal that external audit fees are positively and significantly related to board independence, audit committee expertise, and the frequency of audit committee meetings. The thesis also documents a strong positive three-way interaction between board independence, board size, and board meeting frequency. There is also a positive and a highly significant three-way interaction between audit committee independence, audit committee expertise, and audit committee meeting frequency. Contrary to predictions made in this thesis, the associations between external audit fees and good corporate governance practices are not supported in multivariate testings. The findings of this thesis, however, are generally consistent with those of recent studies documenting positive significant associations between external audit fees and good internal governance structures.

      The thesis also finds a strong negative association between external audit fees and Bumiputera-owned firms. An additional analysis into the internal governance structures of firms in the sample reveals that Bumiputera firms practice more favourable corporate governance practices compared to their Non-Bumiputera counterparts. The results of this additional analysis show that Boards of Directors of Bumiputera-dominated firms are more independent and these firms are more likely to separate the Board Chair and the CEO positions. Audit committees of Bumiputera firms are also represented by more independent directors than those of Non-Bumiputera firms. The results of the additional analysis reaffirm the negative and significant association between external audit fees and Bumiputera-controlled firms.

      The results also support the general findings of the existing audit pricing literature. Audit fees in the Malaysian market are determined by the variables that have consistently been found to influence audit fees in other markets. These variables include client size, receivable and inventory intensity, audit complexity due to the number of subsidiaries, leverage, profitability, and auditor quality.
Keyword Boards of directors -- Membership -- Malaysia.
Corporations -- Malaysia.
Corporations -- Auditing.
Industrial management -- Malaysia.

Document type: Thesis
Collection: UQ Theses (RHD) - UQ staff and students only
 
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Created: Mon, 27 Sep 2010, 12:30:06 EST by Muhammad Noman Ali on behalf of Social Sciences and Humanities Library Service