Journal article
Auditors' Response to Political Connections and Cronyism in Malaysia
Journal of Accounting Research, Vol.44(5), pp.931-963
2006
Abstract
This paper extends the literature on the role of political economy in financial 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.
Details
- Title
- Auditors' Response to Political Connections and Cronyism in Malaysia
- Authors
- Ferdinand Gul (Author) - Hong Kong Polytechnic University
- Publication details
- Journal of Accounting Research, Vol.44(5), pp.931-963
- Publisher
- Wiley-Blackwell Publishing, Inc.
- DOI
- 10.1111/j.1475-679X.2006.00220.x
- ISSN
- 1475-679X
- Organisation Unit
- University of the Sunshine Coast, Queensland; School of Business and Creative Industries
- Language
- English
- Record Identifier
- 99678894602621
- Output Type
- Journal article
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- Business, Finance
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