The effect of auditor’s characteristics, firm financial performance and firm leverage and fraudulent financial reporting (FFR): evidence from Malaysia / Nurul Ain Samsuddin

This study investigates the relationship between auditors’ characteristic, firm losses, firm leverage and Fraudulent Financial Reporting (FFR) among non-financial public listed firms on the Main Market of Bursa Malaysia. Using a sample comprising of 44 fraudulent firms and 44 matching non-fraudulent firms, the study explores the relationship between auditors’ characteristics consisting of auditor reputation, non-audit services (NAS) fee and audit firm tenure with FFR. The study also examines the relationship between firm performance and firm leverage to FFR. Using multiple regression analysis, the findings show that performance and firm leverage were positively associated to FFR. The positive relationship is consistent with agency theory. The results for auditors’ characteristics, however, shows no relationship between FFR and auditor reputation, audit firm tenure and NAS fee.