Citation

Liew, Chui Ling (2023) Political connection, risk management committee and audit fees: Malaysian evidence. PhD thesis, Multimedia University.

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Abstract

This study investigates the impact of risk governance mechanisms on external audit fees in a highly politicized economy – Malaysia. Specifically, this study considers how the formation of Risk Management Committee (RMC) and its characteristics affect audit fees and what its moderating effects are on the relationship between political connection and audit fees. Distinct from other board committees, RMC presents an interesting setting to understand the association between evolving risk governance mechanism and audit fees, especially for firms with political background. Politically connected firms are commonly being viewed as risker and required additional efforts from auditors. RMC plays an increasingly vital role in monitoring the management and providing strategic resources to the boards, with the aim of strengthening the risk oversight function. However, prior literature is comparatively scarce in respect of how RMC influences the audit function, particularly in Malaysian economy where the political influence is pervasive. This study uses 2460 firm-observations from 2012 to 2017, comprising data from non-financial firms listed on the Main Board of Bursa Malaysia, Malaysia’s stock market. Panel regression analyses were adopted in the main analysis, which generated mixed support for the hypotheses. Results show that auditors charged higher audit fees to politically connected firms. Similarly, politically connected firms that have an RMC tend to pay more audit fees. RMC meeting frequency, size and expertise are associated with lower audit fees. Politically connected firms with an RMC with independent members and more diverse experts tend to pay lower audit fees. The findings add to the existing works related to risk-based auditing and risk governance. Also, the findings from this study provide guidance to policy makers and practitioners on the composition of RMC when formulating future risk management legislation.

Item Type:	Thesis (PhD)
Additional Information:	Call No.: HD61 .L54 2023
Uncontrolled Keywords:	Risk management—Political aspects
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28-70 Management. Industrial Management > HD61 Risk in industry. Risk management
Divisions:	Faculty of Management (FOM)
Depositing User:	Ms Nurul Iqtiani Ahmad
Date Deposited:	30 Sep 2025 08:40
Last Modified:	30 Sep 2025 08:40
URII:	http://shdl.mmu.edu.my/id/eprint/14602

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