File(s) under permanent embargo
Auditors' response to political connections and cronyism in Malaysia
This paper extends the literature on the role of political economy in fi- nancial reporting and auditing by testing two hypotheses. The first hypothesis predicts that there will be a greater increase in audit effort and audit fees for Malaysian firms with political connections, as a result of the Asian financial crisis, than for non-politically connected firms because these firms have a higher risk of financial misstatements. The second hypothesis predicts that the audit fees of politically connected firms will decline when capital controls are introduced by the government as a ploy to financially assist politically connected firms to rebound from the crisis, and thus reduces the risk of financial misstatements. The results show that there is a greater increase in audit fees for firms with political connections than for non-politically connected firms as a result of the Asian financial crisis. However, there is a decline in audit fees for politically connected firms after the capital controls are implemented.
History
Journal
Journal of accounting researchVolume
44Issue
5Pagination
931 - 963Publisher
WileyLocation
London, Eng.Publisher DOI
ISSN
0021-8456eISSN
1475-679XLanguage
engPublication classification
C Journal article; C1.1 Refereed article in a scholarly journalCopyright notice
2006, University of Chicago on behalf of the Institute of Professional AccountingUsage metrics
Categories
No categories selectedKeywords
Licence
Exports
RefWorks
BibTeX
Ref. manager
Endnote
DataCite
NLM
DC