The autoregressive distributed lag (ARDL) procedure is used to examine co-integration and the subsequent short-run and long-run effects. Additionally, the model incorporates per capita income, financial development, and crisis as a structural dummy; and the presence of threshold effect on aid inflows is examined. The results show that procurement legislation, financial development, per capita income and crisis have a long-run association with aid inflows. The new public procurement legislation has a positive effect on aid inflows from Australia, the EU, Germany, and the total aid. In the short-run, procurement legislation has a positive effect on aid inflows from the Republic of Korea only; and the procurement policy and financial development have a long-run positive effect on aid inflows to Fiji. Overall, improved procurement policies, a well-developed financial sector and a reasonable level of growth is necessary to bolster aid inflows, whereas political uncertainty and global financial crisis has a retarding effect on aid inflows.
We examine whether audit firm alma mater ties between the auditor and the audit committee (AC) are associated with significantly greater nonaudit services (NAS) provided by the auditor. We further examine whether greater NAS in the presence of such alma mater ties are associated with audit quality. Since the AC is responsible for approving and monitoring the services provided by the auditor, the presence of AC and auditor alma mater ties underscores the controversies surrounding such ties' undermining audit quality. Predicating our hypotheses on social ties theory, we find a positive association between the presence of an audit firm alumnus on the AC and NAS acquired from the alma mater auditor. We further find that this association becomes stronger as the tenure of the alumnus increases. Next, using multiple measures of audit quality, we find that, when the alumnus on the AC is associated with significantly more NAS provided by the alma mater audit firm, the quality of the audit suffers. Collectively, our results suggest that audit firm alma mater ties between the AC and auditor engender economic ties that adversely affect audit quality.Our study provides new evidence on the channels through which the quality of the audit is affected and raises important implications for the composition of the AC, auditor-provided NAS, and client assignment to engagement partners.
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