Abstract
This study aims to analyze the role of an independent audit committee on the relationship between the Risk Management Committee (RMC) and audit fees. We use 510 observations from 216 different comp...
Highlights
Prior research shows that the Risk Management Committee has effectively been playing their role in the control, detection and prevention of risk especially in terms of financial risk (Abdullah, Shukor, & Rahmat, 2017; Abdullah & Said, 2019)
Different from the Risk Management Committee (RMC), audit committee has direct access to audit services, we argue that the existence of a more independent commissioner in the audit committee could be able to strengthen the relationship between the RMC and audit fee
In line with this view, this study found that RMC has a positive association with audit fees, and the existence of a more independent commissioner member as audit committee strengthens the relationship between RMC and audit fee
Summary
Prior research shows that the Risk Management Committee has effectively been playing their role in the control, detection and prevention of risk especially in terms of financial risk (Abdullah, Shukor, & Rahmat, 2017; Abdullah & Said, 2019). An audit is related to a company’s financial risk, only a few research studies show evidence on the relationship between Risk Management Committee (RMC) and audit outcomes (Ahmed & Che-Ahmad, 2016; Ali, Besar, & Mastuki, 2017; Hines, Masli, Mauldin, & Peters, 2015). Recent studies show that RMC and knowledge of the audit committee have a positive relationship with a company’s financial restatement (Ali et al, 2017), but did not find any significant relationship between RMC on audit report lags (Ahmed & CheAhmad, 2016). Prior research shows positive evidence on the relationship between RMC and audit fee (Hines et al, 2015). To our knowledge, there is no existing evidence on how audit committee affect the relationship between RMC and audit fee. This paper fills this gap by investigating the role of an independent audit committee on the relationship between RMC and audit fees
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