Governance structures, ethnicity, and audit fees of Malaysian listed firms

Purpose - The purpose of this study is to examine the association between external audit fees, and board and audit committee characteristics of 736 Malaysian listed firms. It is hypothesised that good corporate governance practices reduce auditors' risk assessments, resulting in lower audit fees. Drawing on the existence of a clearly identifiable ethnic domination of board membership and ownership of Malaysian listed firms, the study also posits that Bumiputera-controlled firms pay higher audit fees because of their weaker governance practices. Design/methodology/approach - This study employs a cross-sectional analysis of 736 firms listed on the Bursa Malaysia for the financial year ending in 2003. Multiple regression analysis is used to estimate the relationships proposed in the hypotheses. Findings - Overall, the results of this study reveal that external audit fees are positively and significantly related to board independence, audit committee expertise, and the frequency of audit committee meetings. The study also finds a strong negative association between external audit fees and Bumiputera-owned firms. An additional analysis into the internal governance structures of firms in the sample show that Bumiputera firms practice more favourable corporate governance practices compared to their non-Bumiputera counterparts. Originality/value - This study is a unique contribution in that it provides data on corporate governance practices in Malaysia for a large sample in the period after the corporate governance reforms taken by Malaysian capital market regulators and participants. Previous studies have shown that Bumiputera-controlled firms pay higher audit fees than non-Bumiputera-controlled firms. These studies have not tested theoretical explanations for this fee differential.Atheoretical explanation provided in the current study is that Bumiputera-controlled firms pay higher audit fees than non-Bumiputera-controlled firms partially because of differences in corporate governance practices. The study finds conflicting results with previous research suggesting that corporate governance practices have changed in Malaysia since the amendments of Bursa Malaysia Listing Requirements, 2001

What Drives TBL Reporting: Good Governance or Threat to Legitimacy?

This paper provides two complementary explanations for the adoption of triple bottom line (TBL) reporting by Australian companies. The first explanation is that companies adopt TBL reporting to legitimise their relationship with society because of adverse publicity from the media. The second explanation is that TBL reporting is adopted because of the company's desire to achieve high quality reporting and transparency inferred by strong corporate governance. Companies with TBL reporting had significantly more adverse media coverage before implementing TBL reporting than non-TBL companies. TBL reporting is also significantly, positively related to the existence of an environmental or sustainable development committee and the frequency of meetings of the audit committee.Griffith Business School, Department of Accounting, Finance and EconomicsFull Tex