Risk management committee and audit pricing: evidence in Malaysia

The aim of this study is to examine the relationship between audit fees and the formation of risk management committee (RMC). Based on the agency theory, it states that agency problem occur due to information asymmetry between the agent and principal. Thus, the formation of RMC may act as an agent...

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Main Author:	Masturah, Malik @ Malek
Format:	Thesis
Language:	eng eng
Published:	2016
Subjects:	HD61 Risk Management
Online Access:	https://etd.uum.edu.my/6050/1/s817471_01.pdf https://etd.uum.edu.my/6050/2/s817471_02.pdf
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id	my-uum-etd.6050
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Shafie, Rohami
topic	HD61 Risk Management
spellingShingle	HD61 Risk Management Masturah, Malik @ Malek Risk management committee and audit pricing: evidence in Malaysia
description	The aim of this study is to examine the relationship between audit fees and the formation of risk management committee (RMC). Based on the agency theory, it states that agency problem occur due to information asymmetry between the agent and principal. Thus, the formation of RMC may act as an agent to principal in assessing and disclosing more information regarding the risks that occur in the company. Hence, this will increase the transparency of the company as well as reduce agency problems thus, leading towards higher quality of financial reporting. This study predicts that by forming separate RMC and having members of RMC whom are more independent, expert and female are more likely to demand for higher audit engagement thus, lead towards higher audit fees. Analyses were conducted by using 208 data listed companies in the Bursa Malaysia in 2014. Ordinary Least Square (OLS) regression method was employed to estimate the relationship between RMC and audit fees. The results show that RMC members with independent non-executive and with financial expertise are significantly, positively associated with audit fees since they demand higher level of assurance in auditing. Meanwhile, separate RMC and female members show that they are positively associated with audit fees but are not significant. Therefore, the results provide initial evidence on the relationship between audit fees and RMC in the Malaysian business environment.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Masturah, Malik @ Malek
author_facet	Masturah, Malik @ Malek
author_sort	Masturah, Malik @ Malek
title	Risk management committee and audit pricing: evidence in Malaysia
title_short	Risk management committee and audit pricing: evidence in Malaysia
title_full	Risk management committee and audit pricing: evidence in Malaysia
title_fullStr	Risk management committee and audit pricing: evidence in Malaysia
title_full_unstemmed	Risk management committee and audit pricing: evidence in Malaysia
title_sort	risk management committee and audit pricing: evidence in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
publishDate	2016
url	https://etd.uum.edu.my/6050/1/s817471_01.pdf https://etd.uum.edu.my/6050/2/s817471_02.pdf
_version_	1747828014947762176
spelling	my-uum-etd.60502021-04-06T06:22:49Z Risk management committee and audit pricing: evidence in Malaysia 2016 Masturah, Malik @ Malek Shafie, Rohami Tunku Puteri Intan Safinaz School of Accountancy (TISSA) Tunku Puteri Intan Safinaz School of Accountancy (TISSA) HD61 Risk Management The aim of this study is to examine the relationship between audit fees and the formation of risk management committee (RMC). Based on the agency theory, it states that agency problem occur due to information asymmetry between the agent and principal. Thus, the formation of RMC may act as an agent to principal in assessing and disclosing more information regarding the risks that occur in the company. Hence, this will increase the transparency of the company as well as reduce agency problems thus, leading towards higher quality of financial reporting. This study predicts that by forming separate RMC and having members of RMC whom are more independent, expert and female are more likely to demand for higher audit engagement thus, lead towards higher audit fees. Analyses were conducted by using 208 data listed companies in the Bursa Malaysia in 2014. Ordinary Least Square (OLS) regression method was employed to estimate the relationship between RMC and audit fees. The results show that RMC members with independent non-executive and with financial expertise are significantly, positively associated with audit fees since they demand higher level of assurance in auditing. Meanwhile, separate RMC and female members show that they are positively associated with audit fees but are not significant. Therefore, the results provide initial evidence on the relationship between audit fees and RMC in the Malaysian business environment. 2016 Thesis https://etd.uum.edu.my/6050/ https://etd.uum.edu.my/6050/1/s817471_01.pdf text eng public https://etd.uum.edu.my/6050/2/s817471_02.pdf text eng public masters masters Universiti Utara Malaysia Abbott, L., Parker, J., S., Peters, G. F. & Raghunandan, K. 2003. An empirical investigation of the audit fees, nonaudit fees, and audit committees. Contemporary Accounting Research 20(2): 1-21. Adams, R., & Ferreira, D.(2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics 94 (2): 291–309. A Global Corporate Governance Forum Publication. (2015). International Finance Corporation (Brochure). Alzharani, A.M. & Aljaaidi, K.S. (2015). An empirical investigation of audit committee effectiveness and risk management : Evidence from Saudi Arabia. Journal of Accounting and Taxation, Vol.7,pp 33-49. 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Risk management committee and audit pricing: evidence in Malaysia

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