The Effect of Regulatory Oversight on the Association between Internal Governance Mechanisms and Internal Audit Fees

2011 ◽  
Author(s):  
Norziaton Ismail
Keyword(s):  
Internal Audit ◽  
Audit Fees ◽  
Governance Mechanisms ◽  
Regulatory Oversight ◽  
Internal Governance ◽  
Internal Governance Mechanisms

Institutional investor preferences

2019 ◽  
Vol 42 (5) ◽  
pp. 641-659 ◽  
Author(s):  
Hamdan Amer Al-Jaifi ◽  
Ahmed Hussien Al-Rassas ◽  
Adel Al-Qadasi
Keyword(s):  
Institutional Investors ◽  
Audit Committee ◽  
Internal Audit ◽  
Institutional Ownership ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Audit Function ◽  
Internal Governance Mechanisms ◽  
Emerging Country

Purpose This study aims to examine the institutional investors’ preferences for internal governance mechanisms (internal audit function and audit committee effectiveness) in an emerging country like Malaysia. Design/methodology/approach A sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012 is used. The two-stage least squares using instrumental variables (IV-2SLS) analysis is used to examine the relationships. To corroborate the findings of this study, a regression based on a one-year lag of the independent variables is used. Furthermore, ordinary least square regression and Generalized Method of Moments using instrumental variables (IV-GMM) are used. Findings Positive associations are found between the internal audit function and audit committee effectiveness and the institutional ownership. Research limitations/implications These findings imply that institutional investors gravitate to firms that have high investment in internal audit function and effective audit committee. These findings are consistent with the conjecture that institutional investors try to minimize monitoring and exit costs and meet their fiduciary responsibility by investing in better internal audit firms. Practical implications This study offers insights to policymakers interested in enhancing internal governance mechanisms to attract institutional investors. Originality/value Limited empirical studies have examined the relation between internal governance mechanisms (internal audit function and audit committee effectiveness) and institutional ownership. This study adds to the existing literature on the importance of internal governance mechanisms by documenting an association between internal audit function and audit committee effectiveness and institutional ownership in an emerging country like Malaysia.

The effectiveness of internal corporate governance and audit quality: the role of ownership concentration – Malaysian evidence

2018 ◽  
Vol 18 (2) ◽  
pp. 233-253 ◽  
Author(s):  
Adel AlQadasi ◽  
Shamharir Abidin
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Audit Fees ◽  
Ownership Concentration ◽  
Supporting Evidence ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms

Purpose This study is motivated by the competing views on whether internal governance mechanisms complement or substitute for external auditing, and how this association is affected by ownership concentration. The complementary view predicts that good internal governance mechanisms are related to high-quality audit. On the other hand, corporate governance mechanisms may be substituted for each other, so more investment in governance mechanisms leads to less investment in external auditing. Therefore, this study aims to examine the association between internal governance mechanisms and the demand for audit quality. Design/methodology/approach Data from Malaysian listed companies during the period 2009 to 2012 are used. Ordinary least square (OLS) regression is applied to analyse the data. Findings Companies with a higher concentration of ownership are less likely to demand extensive auditing. In addition, the study provides supporting evidence for the complementary association between a company’s governance and audit fees. However, the ownership concentration plays a minor role in the positive association between internal corporate governance and audit quality. Further tests are conducted and support the main findings. Practical implications Significant implications are provided for the audit profession in emerging economies, where concentrated ownership is common, to help policymakers and regulators in determining the power of controlling shareholders on audit quality and firm’s governance. The study’s findings open up avenues for further research. Originality/value This is the first work to address the role of ownership concentration in the association between corporate governance and audit quality; it suggests that the ownership structure must be considered in examining the effectiveness of corporate governance. The study also provides a comprehensive combination of internal governance mechanisms.

An investigation of the relation between ownership structure and management control in professional service organisations

2019 ◽  
Vol 15 (1) ◽  
pp. 147-168 ◽  
Author(s):  
Robyn King ◽  
Peter Clarkson
Keyword(s):  
Ownership Structure ◽  
Empirical Support ◽  
Professional Services ◽  
Management Control ◽  
Professional Service ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
High Performing ◽  
Internal Governance Mechanisms

PurposeThis study aims to examine the interplay between ownership structure (organisational form) and management control system (MCS) design as governance structures within Australian primary health-care organisations (PHOs), seeking support for the suggestion that professional services will be most efficiently and effectively provided in organisations that have internal governance that is matched to their ownership form.Design/methodology/approachThe analysis is based on a series of in-depth investigations into the MCS choices made by seven Australian PHOs. Arguing that the degree of information impactedness is inversely related to the level of general practitioner (GP) ownership, organisations where more than 50 per cent of the GPs working within the practice are owners are classified as “high ownership” (“low information impactedness”). The adoption by high-performing organisations of their predicted MCS archetype according to Speklé’s development is then interpreted as representing empirical support.FindingsThe findings provide uniform support for the importance of the match between ownership structure and internal governance mechanisms. As predicted, the two high-performing, high member-owned organisations reported MCS resembling exploratory archetypes, the three high-performing, low member-owned organisations reported MCS consistent with a boundary archetype and the two low-performing organisations reported little emphasis on any control.Research limitations/implicationsThis study provides evidence of the importance of the appropriate match between ownership structure and internal governance mechanisms for PHOs.Practical implicationsThis study has potential to assist managers, owners and advisors to optimise MCS design in professional services organisations where there is heterogeneous ownership by professionals.Originality/valueThis study is one of the few attempts to provide empirical support for the assertion of the importance of a match between ownership structure and MCS design. It also represents one of the few attempts to provide empirical support for Speklé’s (2001) control archetypes, here the boundary and exploratory archetypes, archetypes that are applicable within important sectors of the economy, notably the professional services sector.

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