Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries

We study the association between auditor reappointment (initial relationship stage), including recurring auditor appointment over several consecutive years (close relationship stage) and company engagement in related-party transactions (RPTs) for selected listed companies from Hong Kong, Malaysia, S...

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Main Authors:	Mohd Mohid Rahmat, Siti Hajar Asmah Ali
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2016
Online Access:	http://journalarticle.ukm.my/10822/ http://journalarticle.ukm.my/10822/ http://journalarticle.ukm.my/10822/1/15148-48603-1-PB.pdf

id	ukm-10822
recordtype	eprints
spelling	ukm-108222017-10-11T08:17:34Z http://journalarticle.ukm.my/10822/ Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries Mohd Mohid Rahmat, Siti Hajar Asmah Ali, We study the association between auditor reappointment (initial relationship stage), including recurring auditor appointment over several consecutive years (close relationship stage) and company engagement in related-party transactions (RPTs) for selected listed companies from Hong Kong, Malaysia, Singapore and Thailand. The results show that auditor reappointment has significant and negative associations with company engagement in RPTs. By contrast, the close ACR relationship increases company engagement in RPTs. The evidence also suggests that Big 4 audit firms can reduce company engagement in RPTs, even when they have a close relationship. However, the findings derived from a sub-sample of RPT companies suggest that the close relationship between Big 4 audit firms and their clients substantially encourages companies to engage in RPTs. Overall, these findings are consistent with theories in which higher audit quality is effective at monitoring RPTs, but the established relationship looks likely to create conflicting opinions that impair auditors’ independent judgment. Nevertheless, the likelihood of conflict disappears when clients operate in countries that more effectively implement and enforce regulations and protect minority shareholders. Penerbit Universiti Kebangsaan Malaysia 2016 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/10822/1/15148-48603-1-PB.pdf Mohd Mohid Rahmat, and Siti Hajar Asmah Ali, (2016) Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries. Jurnal Pengurusan, 48 . pp. 47-60. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/883
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	We study the association between auditor reappointment (initial relationship stage), including recurring auditor appointment over several consecutive years (close relationship stage) and company engagement in related-party transactions (RPTs) for selected listed companies from Hong Kong, Malaysia, Singapore and Thailand. The results show that auditor reappointment has significant and negative associations with company engagement in RPTs. By contrast, the close ACR relationship increases company engagement in RPTs. The evidence also suggests that Big 4 audit firms can reduce company engagement in RPTs, even when they have a close relationship. However, the findings derived from a sub-sample of RPT companies suggest that the close relationship between Big 4 audit firms and their clients substantially encourages companies to engage in RPTs. Overall, these findings are consistent with theories in which higher audit quality is effective at monitoring RPTs, but the established relationship looks likely to create conflicting opinions that impair auditors’ independent judgment. Nevertheless, the likelihood of conflict disappears when clients operate in countries that more effectively implement and enforce regulations and protect minority shareholders.
format	Article
author	Mohd Mohid Rahmat, Siti Hajar Asmah Ali,
spellingShingle	Mohd Mohid Rahmat, Siti Hajar Asmah Ali, Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
author_facet	Mohd Mohid Rahmat, Siti Hajar Asmah Ali,
author_sort	Mohd Mohid Rahmat,
title	Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
title_short	Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
title_full	Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
title_fullStr	Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
title_full_unstemmed	Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries
title_sort	do managers reappoint auditor for related party transactions? evidence from selected east asian countries
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2016
url	http://journalarticle.ukm.my/10822/ http://journalarticle.ukm.my/10822/ http://journalarticle.ukm.my/10822/1/15148-48603-1-PB.pdf
first_indexed	2023-09-18T19:58:31Z
last_indexed	2023-09-18T19:58:31Z
_version_	1777406691472572416

Do managers reappoint auditor for related party transactions? Evidence from selected East Asian countries

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