Ownership structured firms in Malaysia: audit committee characteristics and audit fees / Norziaton Ismail Khan, Susela Selvaraj Devi and Meng Chan Wai

The political economy shaped the ownership structure of corporations in
Malaysia. The rapid growth of the economy has not diluted the concentrated
ownership structure in the Malaysian firms. Malaysia has its own unique
feature of ownership structured firms which can be divided into politically
connected (PCON) firms, institutional ownership and managerial ownership
(INST&MGRL) firms, and family ownership (FAMILY) firms. The purpose
of this paper is to investigate whether PCON, INST&MGR and FAMILY
firms are associated with higher audit fees. This study also examines the
association between audit committee characteristicsIND, DIL and EXP and
audit fees based on the revamped Bursa Listing Requirementsin 2008, which
focus on audit committee characteristics. Using data from 567 firm-year
observations from years 2008 to 2010, we find that PCON firms pay higher
audit fees than INST&MGRL and FAMILY firms. Further, the association
between audit committee IND, DIL and EXP and audit fees is positive and
significant for PCON firms, suggesting that the government intervention is expected to produce better governance and improve the firm’s business
performance. Thisis because the government has given much attention and
initiatives to ensure that these firms perform in an effective way and assist
the government to improve the economic growth.