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Institutional monitoring, political connections and audit fees: evidence from Malaysian firms
journal contribution
posted on 2017-07-01, 00:00 authored by C M Tee, Ferdinand Gul, Y B Foo, C G TehThis study employs data on Malaysian firms from 2003 to 2011 to show that ownership by institutional investors is positively associated with audit fees, and this positive association is stronger for firms that are politically connected to the Malaysian government. The results of this study are aligned with the theories that institutional investors can play an effective monitoring role by demanding higher audit quality, particularly if their investee firms are politically connected. Additional tests reveal that the main results are largely driven by foreign institutional investors, while it is insignificant for local institutional investors. Therefore, our evidence suggests that institutional investors, particularly foreign institutions, demand increased audit effort (proxied by audit fees) as a method to monitor politically connected firms.
History
Journal
International journal of auditingVolume
21Issue
2Pagination
164 - 176Publisher
WileyLocation
Chichester, Eng.Publisher DOI
ISSN
1090-6738eISSN
1099-1123Language
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2017, John Wiley & Sons Ltd.Usage metrics
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