An Investigation on the Audit Committees Effectiveness:  The Case for GLCs in Malaysia

Jamil, Nurul Nazlia; Nelson, Sherliza Puat

doi:10.22146/gamaijb.5484

Cited by 11 publications

(11 citation statements)

References 44 publications

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“…This contradicts with Jamil and Nelson (2011) that highlighted Malaysian GLCs (Government Link Companies) generally have lower performance as compared to their rival private sector firms. Consequently, this recent result extends Jamil and Nelson (2011) that covers the period of 2003-2009, when current study utilizes year 2010, and shows that GLCs has higher ROA at 0.081 (Table V), whereas Jamil and Nelson (2011) reports 0.065. In a nut shell, even though GOWN ¼ 1 has higher stake from the government, they still earn higher profits than GOWN ¼ 0, but at the same time paid higher audit fees.…”

Section: Regression Analysissupporting

confidence: 75%

Ownership structures influence on audit fee

Nelson

Mohamed-Rusdi

2015

Journal of Accounting in Emerging Economies

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Purpose -The purpose of this paper is to investigate the association between corporate ownership structures and audit fees paid to external auditors by Malaysian companies listed on Bursa Malaysia. This study focusses on the extent of the auditor's reliance on the client's internal control inasmuch as the corporate ownership structures are varied, and, ultimately, affect the audit fees. Design/methodology/approach -This study applies the agency theory in formulating three hypotheses that guide the results analysis. By employing a multi regression model for a sample of 345 Malaysian companies listed on Bursa Malaysia, this study examines the relationship of ownership structure, namely, managerial ownership, foreign ownership and government ownership with audit fees using data for 2010. Findings -The results show a significant positive relationship between audit fees and firms with larger foreign ownership and government ownership but no significant relationship with firms with higher managerial ownership. This study contributes recent evidence concerning the relationship between corporate ownership structure and audit fees. Practical implications -Regulators may consider ownership structure on the standards or regulation setting in order to be practical and operationalized in line with the impact associated with different ownership structures. The practitioners may also design appropriate methodologies and procedures for the different ownership structures for high-quality service and to standardize the risk mitigation process. Social implications -The ownership structures have different influences on the audit fees, as well as complexity of the firms and their profitability. Originality/value -The study looks upon certain percentages of ownership structures, and how they affects audit fees, firms complexity and profitability.

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Section: Regression Analysissupporting

confidence: 75%

Ownership structures influence on audit fee

Nelson

Mohamed-Rusdi

2015

Journal of Accounting in Emerging Economies

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“…However, a few studies have indicated an insignificant effect of financial knowledge on earnings management (e.g. Ghosh, Marra, & Moon, 2010;Jamil & Nelson, 2011;Rainsbury, Bradbury, & Cahan, 2008;Song & Windram, 2004).…”

Section: Audit Committee Financial Expertise and Earnings Managementmentioning

confidence: 99%

Audit Committee Effectiveness and Earnings Management Among Publicly Listed Firms in Kenya

Kapkiyai

Cheboi

Komen

2020

SJOM

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Objective: The paper sought to investigate the role of an effective audit committee in controlling earnings management practices. Design / Methodology: A panel data sourced from the audited financial reports of firms listed at the Kenyan Nairobi Securities Exchange for the periods between 2004 and 2017 were analyzed using a panel regression model. Findings: Audit committee effectiveness proved an important monitoring mechanism for earnings management. The independence, Meeting frequency, and financial expertise of the audit committee evidenced a negative and significant effect on earnings management. Practical Implications: Firms need to ensure that their audit committees operate effectively. This is achieved through enhancing their independence, ensuring optimal meeting frequency, and a higher number of members with financial expertise for fewer earnings management. Originality: The paper suggests the ways through which audit committee effectiveness can be enhanced to reduce earnings management amid rampant global financial scandals.

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“…The independent non-executive directors help to strengthen the role of audit committee. As the independence of the audit committee increases it is expected to help company to enhance the monitoring function on behalf of shareholders (Jamil and Nelson, 2011). This study also reports that the EM is influence by the audit committee independence.…”

Section: Audit Committee Independencementioning

confidence: 61%

“…There is a need of audit committee effectiveness because it is important in order to mitigate the EM activities among the manager of the companies. Any financial information disclosed by management should be more scrutinized in order to avoid EM practices in reporting process (Jamil and Nelson, 2011). However, the question is whether the audit committee will act effectively to mitigate the EM activities among the company management.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Audit Committee on Earnings Management: The Relevance of Malaysian Code of Corporate Governance 2007

Ghazali¹,

Suffian²,

Ghafar³

2021

IJARBSS

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This study aims to determine whether there is any significant association between the audit committee effectiveness and earnings management as a proxy of earnings quality of financial reporting before and after MCCG Revised 2007. Sample data of total 96 Public Listed Company's on Bursa Malaysia in total number of year observation is 570 for six years which are three years before MCCG Revised 2007(2004-2006 and three years after MCCG Revised 2007. The study finds that, there are insignificant association between audit committee effectiveness and earnings management throughout selected period before and after MCCG Revised 2007. However, from all five audit committee characteristics used as variable in this study, only one out of five characteristics of audit committee effectiveness which is higher proportion of audit committee with financial expertise is negatively and significantly associated with earnings management. This study is important as it provides additional knowledge about the impact of audit committee effectives of good corporate governance on reducing EM. Future study can include other measures of earnings quality models such as real earnings management as more accurate result can be captured, and it can be differentiated with other methods. Future research should consider other factors that may compromise the effectiveness of audit committee in performing their role on mitigating the EM activities. For examples, future research may consider the presence of inside directors and management of the company to compromise the audit committee members to perform their role effectively.

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An Investigation on the Audit Committees Effectiveness: The Case for GLCs in Malaysia

Cited by 11 publications

References 44 publications

Ownership structures influence on audit fee

Ownership structures influence on audit fee

Audit Committee Effectiveness and Earnings Management Among Publicly Listed Firms in Kenya

The Impact of Audit Committee on Earnings Management: The Relevance of Malaysian Code of Corporate Governance 2007

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