Board of Directors’ Independence and Modified Audit Report: An Analysis of the Malaysian Environment

Suhaimi Ishak, Mohd ‘Atef Md Yusof

Abstract


ABSTRAK

Tujuan kajian ini adalah untuk menguji sama ada lembaga pengarah bebas memberi kesan ke atas laporan audit tidak baik bagi syarikat-syarikat bukan perbankan dan kewangan yang berdaftar di Bursa Malaysia. Data dikumpulkan daripada laporan tahunan syarikat-syarikat sebanyak 300 sampel bagi tempoh 2004 sehingga 2009. Kedua-dua analisa descriptive dan multivariate digunakan untuk mencapai objektf-objektif kajian. Hasilnya menunjukan lembaga pengarah bebas memberi kesan terhadap penerimaan laporan audit tidak baik. Seterusnya, kadar hutang syarikat yang tinggi akan meningkatkan penerimaan laporan audit tidak baik sementara bagi syarikat yang mempunyai banyak cabang perniagaan, penerimaan laporan audit tidak baik berkurang. Walaubagaimanapun, saiz lembaga pengarah dan keuntungan ke atas asset tidak mempengaruhi pengeluaran laporan audit tidak baik oleh juruaudit. Hasil kajian menyediakan bukti ilmiah ke atas perkembangan dan kepentingan lembaga pengarah bebas dan kaitannya kepada laporan audit tidak baik.

Kata kunci: Lembaga pengarah bebas; laporan audit tidak baik; Malaysia

ABSTRACT

The aim of the paper is to examine whether board of directors’ (BODs) independence has an effect on the modified audit report of the non-banking and financial companies listed on Bursa Malaysia. Data is collected from the annual reports of a sample of 300 companies for the period of 2004 to 2009. Both descriptive and multivariate analyses were employed to address the research objectives. The results indicate that BODs’ independence is negatively related to acceptance of modified audit report. In addition, a company’s higher debts or leverage may probably increase the acceptance of modified audit report; while for companies with more business segments, the acceptance of modified audit report is less. However, the size of the BODs and return on assets or asset profitability do not influence the issuance of modified audit report by the auditor. The findings provide empirical evidence on the development and importance of BODs’ independence relating to modified audit report.

Keywords: Board of directors’ independence; modified audit report; Malaysia


Full Text:

PDF

Refbacks

  • There are currently no refbacks.


DISCLAIMER

The editors and publisher of Jurnal Pengurusan have made every possible effort to verify the accuracy of all information contained in this publication. Any opinions, discussions, views and recommendations expressed in the article are solely those of the authors and are not of Jurnal Pengurusan, its editors or its publisher. Jurnal Pengurusan, its editors and its publisher will not be liable for any direct, indirect, consequential, special, exemplary, or other damages arising therefrom.