Non-audit services and auditor independence in Malaysia : knowledge spillover in construction companies / Wan Zurina Nik Abdul Majid, Marziana Madah Marzuki and Muhammad Amiruddin Azizi Salleh

Nik Abdul Majid, Wan Zurina and Marzuki, Marziana Madah (2021) Non-audit services and auditor independence in Malaysia : knowledge spillover in construction companies / Wan Zurina Nik Abdul Majid, Marziana Madah Marzuki and Muhammad Amiruddin Azizi Salleh. In: e-Proceedings of International Conference on Language, Education, Humanities &Social Sciences (i-LEdHS2021), 22 Febuari 2021, UiTM Cawangan Kelantan.

Abstract

The study examines the relationship between non-audit services (NAS) and auditor independence in construction companies in Malaysia. The study also considers other control variables that contribute to the independence of auditor such as leverage, big4, loss, family firm, auditor ethnicity, capital intensity, audit fee and audit committee independence. The study employs descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of NAS on auditor independence. The data for NAS and other control variables were hand collected from annual reports downloaded from Bursa Malaysia’s website. Based on 147 firm-year observations from construction companies for the period 2017-2019, the study found that the joint produce of audit and NAS did not compromise auditor independence. This empirical result failed to prove the economic bond created between auditors and clients that restricted the auditors from performing their duty objectively. The finding supports the argument of knowledge spillover in which while doing audit, the auditor gains experience and yield audit efficiency. These results contribute to Malaysia’s policy deliberation to account for the effects of NAS on auditor independence using the direct method of audit opinion. This study contributes to theoretical perspectives on knowledge spillover which is very limited in Malaysia

Metadata

Item Type: Conference or Workshop Item (Paper)
Creators:
Creators
Email / ID Num.
Nik Abdul Majid, Wan Zurina
wzurina@uitm.edu.my
Marzuki, Marziana Madah
UNSPECIFIED
Subjects: H Social Sciences > HJ Public Finance > Auditing
H Social Sciences > HJ Public Finance > Study and teaching. Research
H Social Sciences > HJ Public Finance > Tax consultants
Divisions: Universiti Teknologi MARA, Kelantan > Machang Campus
Event Title: e-Proceedings of International Conference on Language, Education, Humanities &Social Sciences (i-LEdHS2021)
Event Dates: 22 Febuari 2021
Page Range: pp. 186-195
Keywords: Auditor independence, audit opinion, NAS, knowledge spillover, economic bonding, audit quality
Date: 22 February 2021
URI: https://ir.uitm.edu.my/id/eprint/44648
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