Ownership Structured Firms in Malaysia (original) (raw)
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Corporate Ownership and Control, 2012
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This research is conducted in the Malaysian corporate setting with the presence of favoured companies or politically connected companies (PCON). PCON companies are perceived by the market and external auditors to be riskier than non-politically connected companies. In addition, these companies generally exhibit poor corporate governance practices and face agency problems. However, the enforcement of tighter regulations and the greater emphasis on risk management and governance practices within the PCON companies further indicate the growing importance of having a strong audit committee and internal audit functions in fulfilling corporate governance responsibilities. With reference to the findings from the interviews with the regulators, external auditors and internal auditors, the audit committee and the head of internal auditors of PCON companies have been complying with the Bursa Malaysia Listing Requirements, which were revised in 2008. This observation strengthens claims that the corporate governance regulatory framework has indeed been effective. The involvement of the audit committee and internal audit functions in strengthening internal controls demand higher audit quality from the external auditors, and, hence, higher audit fees.
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The separation of ownership and management functions in modern corporations and the presence of information asymmetric produce the possibility of principal-agent conflict. This study investigates the relationship between ownership structure and company performance of public listed companies in Malaysia. The ownership is divided into two categories; managerial ownership and institutional ownership. Further, this study investigates the affect of audit quality towards the company performance.Panel data of 730 Malaysian public listed companies were examined. Normality check of the data was also carried out and some of the measures were transformed into logarithm to control the skewed nature of data. As multivariate regression is used to analyze the data in this study, assumptions of multicollinearity, hemoscedasticity and linearity are also tested. Furthermore, this study applied the F-test, Chow test and Hausman test to determine the best statistical method. The analysis utilizingGLSfi...
Political connections, corporate governance and audit fees in Malaysia
Managerial Auditing Journal, 2011
Purpose-The purpose of this paper is to examine the relationship between political connection, corporate governance and audit fees in Malaysia. Specifically, it is argued that politically connected firms are perceived to be riskier and thus require auditors to undertake greater audit efforts which in turn lead to higher audit fee. Furthermore, it is also hypothesised that the demand for better corporate governance practices requires more audit effort exert from the auditors, and the demand for higher quality work is expected to be stronger for politically connected firms as these firms are being perceived to have higher risks. This is turn results in higher fees paid to the external auditor. Design/methodology/approach-This paper employs panel regression analysis. The panel data set consists of 382 non-financial firms (1,022 observations) for three years from year 2001 to 2003. Findings-Based on 1,022 firm-year observations for the period of 2001 to 2003, the results reveal that politically connected firms pay higher audit fees, while firms with better governance demand a higher audit quality, leading to higher audit fees. However, there is no evidence to support that corporate governance demands for a higher quality audit especially for politically connected firms. Originality/value-This paper contributes to the corporate governance-audit fees literature by examining a large number of corporate governance variables based on the Malaysian Code on Corporate Governance. In particular, instead of using several individual governance variables such as audit committee, board structure or composition, this study condensed the large number of corporate governance variables into a single index. Furthermore, this study was conducted in Malaysia, which is a unique environment that offers clear identifiable segments based along ethnic line, whereby, politically favoured firms are generally given special privileges by the government.
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Pertanika Journal of Social Sciences & Humanities, 2015
This study investigates the relationship between the ownership structure of Malaysian public-listed companies and the choice of auditor based on ethnicity. In addition, the study compares results for the years 2006, 2007 and 2008. The years were chosen as the Malaysian Code of Corporate Governance (MCCG) was revised in 2007. This enabled comparison to be made in the pre, during and post revision periods of the Malaysian Code of Corporate Governance. The data were derived from a sample size of 300 companies listed on Bursa Malaysia for three years i.e. 2006, 2007 and 2008. As such, it is possible to observe any impacts of the changes in the revised MCCG on ownership structure and auditor's ethnicity. Multinomial logistic regression was employed to analyse the relationship as the data levels support its use. It is found that in general MCCG 2007 influences the selection of auditor's ethnicity by companies. Future research is recommended to study the reasons and rationale of this result by employing other research strategies such as qualitative techniques and increasing the sample size to get more generalisable findings.
Determinants of Audit Fees in Malaysia's Top 100 Listed Companies
International Journal of Strategic Decision Sciences, 2014
This paper examines the determinants of audit fees in a sample of top 100 companies listed in Bursa Stock Exchange in Malaysia; market capitalization of these companies is about 85% of the total market capitalization at the end of 2012. The authors collected data from the annual reports of the companies for the year 2012, and analyzed it using a multiple regression model. The authors report that firm size, profitability, and ownership structure are the main determinants of audit fees in Malaysia. Additionally, profitability shows a negative and significant relationship, which is also in line with findings of the most recent studies. The results also indicate that there is no Big 4 premium in audit fees in Malaysia; interestingly, the relationship though insignificant is negative. The adjusted R square is approximately 47% and there were no multicollinearity issues among the variables. The study makes an incremental contribution to the literature on audit fees in the Malaysian context.
Managerial Ownership, Audit Quality and Firm Performance in Malaysian
2013
The separation of ownership and management functions in modern corporations and the presence of information asymmetric produce the possibility of principal-agent conflict. This study investigates the relationship between managerial ownership and company performance of public listed companies in Malaysia. Further, this study investigates the effect of audit quality on company performance. As multivariate regression is used to analyze the data in this study, assumptions of multicollinearity, hemoscedasticity and linearity are also tested. Furthermore, this study applied the F-test, Chow test and Hausman test to determine the best statistical method. The analysis utilizing GLS fix effects estimations technique is applied. The results showed that the managerial ownership had negative and significant relationship with ROA and Tobin's Q. Therefore, the managerial ownership does not influence corporate performance in Malaysia and the principal agent problems cannot be solved through an increase of managerial ownership.Further, audit quality showed positively effect to both of performance indicators. This provide that the external audit provides the monitoring device to reduce information asymmetry between the managers and the shareholders
Corporate Governance Quality and Audit Quality in Malaysia
SHS Web of Conferences, 2017
This paper examines the impact of corporate governance quality on audit quality in Malaysia. The sampling frame is 457 Malaysian non-finance listed companies, over the periods 2003 to 2007 (pre-2007 Code period) and 2008 to 2012 (post-2007 Code period), consisting of 2,285 observations for each period. This study uses pooled ordinary least square (OLS) to test the research hypotheses and model. The results show that the effectiveness of the audit committee (AC) has no significant influence on audit fees in the pre-and post-2007 Code period, and the effectiveness of the board has no significant influence on audit fees in the pre-2007 Code period, although it has significant influence on audit fees in the post-2007 Code period. The results suggest that the existing corporate governance framework in relation to AC has limitation in its governance role on audit process. Our study contributes to existing literature conducted in the US, the UK and Australia where their institutional settings are different from that of Malaysia. In addition, our study is based on the 2007 Code's recommendation which contributes to the previous research conducted in Malaysia and provides an insightful evidence to the regulator on the corporate governance regime in Malaysia.
Corporate Governance & Auditor Choice in Malaysia
SHS Web of Conferences, 2017
The aim of this paper is to investigate the determinants of firm's auditor choice in Malaysia in respect of their corporate governance mechanisms. A logit regression model was developed to test the impact of firms' internal corporate governance mechanism on auditor choice decisions made by public listed companies listed on main board of Bursa Malaysia from year 2006 to 2015. Five variables are used to proxy for firm's internal corporate mechanism which are the ownership concentration, the duality of CEO and chairman of BOD, the size of audit committee, the size of BOD and the number of independent directors on the board. All auditors in Malaysia were classified into Big Four and non-Big Four, assuming Big Four auditors can provide higher quality audit services. The final result show that firms with less concentrated ownership, with larger size of audit committee, larger size of the BOD, with lower proportion of independent directors on the board, or in which CEO and BOD's chairman are not the same person are more likely to hire a high-quality auditor. Hence, it suggests that when benefits from lowering capital raising costs are trivial, firms with good corporate governance mechanism are prone to choose a high-quality auditor.