The relationship between risk management committee characteristics and modified audit opinion in Malaysia

The relationship between risk management committee characteristics and modified audit opinion in Malaysia

The existence of a separate risk management committee (RMC) in non-banking and non-financial companies is seen as very important. It serves as a crucial element in risk management process and as a corporate governance mechanism. This study investigates the relationship between the existence and char...

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Main Author: Suhaimi, Ishak
Format: Thesis
Language:eng
eng
Published: 2015
Subjects:
HD61 Risk Management
Online Access:https://etd.uum.edu.my/4938/1/s93574.pdf
https://etd.uum.edu.my/4938/2/s93574_abstract.pdf
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institution Universiti Utara Malaysia
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language eng
eng
advisor Md Yusof, Mohd 'Atef
topic HD61 Risk Management
spellingShingle HD61 Risk Management
Suhaimi, Ishak
The relationship between risk management committee characteristics and modified audit opinion in Malaysia
description The existence of a separate risk management committee (RMC) in non-banking and non-financial companies is seen as very important. It serves as a crucial element in risk management process and as a corporate governance mechanism. This study investigates the relationship between the existence and characteristics of a RMC and modified audit opinion issued by the auditors for the non-banking and non-financial companies listed on Bursa Malaysia. Data is collected from the annual reports of 300 companies for the period of 2004 until 2009. Both descriptive and multivariate analyses are employed to address the research objectives. The results indicate that a separate RMC is negatively related to acceptance of modified audit opinion. Meanwhile, RMC's members with accounting and financial background also reduce the acceptance of modified audit opinion. For RMC's members sitting on more than one board committee, the probability of the company receiving modified audit opinion is higher. Further, companies experiencing modified audit opinion and losses during prior accounting years as well as higher leverage are positively associated with the acceptance of modified audit opinion. Lastly, companies with more than one business segment reduce the acceptance of modified audit opinion. The findings provide empirical evidence on the development and importance of the existence and characteristics of a RMC for the quality of companies' financial reporting. The existence of a separate RMC in non-banking and non-financial companies can reduce the acceptance of modified audit opinion due to risk reasons. Thus, regulators and policy makers need to note the importance of the existence of a separate RMC in nonbanking and non-financial companies as well as some characteristics of the committee that contribute to its success
format Thesis
qualification_name Ph.D.
qualification_level Doctorate
author Suhaimi, Ishak
author_facet Suhaimi, Ishak
author_sort Suhaimi, Ishak
title The relationship between risk management committee characteristics and modified audit opinion in Malaysia
title_short The relationship between risk management committee characteristics and modified audit opinion in Malaysia
title_full The relationship between risk management committee characteristics and modified audit opinion in Malaysia
title_fullStr The relationship between risk management committee characteristics and modified audit opinion in Malaysia
title_full_unstemmed The relationship between risk management committee characteristics and modified audit opinion in Malaysia
title_sort relationship between risk management committee characteristics and modified audit opinion in malaysia
granting_institution Universiti Utara Malaysia
granting_department Othman Yeop Abdullah Graduate School of Business
publishDate 2015
url https://etd.uum.edu.my/4938/1/s93574.pdf
https://etd.uum.edu.my/4938/2/s93574_abstract.pdf
_version_ 1747827831856955392
spelling my-uum-etd.49382021-04-05T01:28:07Z The relationship between risk management committee characteristics and modified audit opinion in Malaysia 2015 Suhaimi, Ishak Md Yusof, Mohd 'Atef Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD61 Risk Management The existence of a separate risk management committee (RMC) in non-banking and non-financial companies is seen as very important. It serves as a crucial element in risk management process and as a corporate governance mechanism. This study investigates the relationship between the existence and characteristics of a RMC and modified audit opinion issued by the auditors for the non-banking and non-financial companies listed on Bursa Malaysia. Data is collected from the annual reports of 300 companies for the period of 2004 until 2009. Both descriptive and multivariate analyses are employed to address the research objectives. The results indicate that a separate RMC is negatively related to acceptance of modified audit opinion. Meanwhile, RMC's members with accounting and financial background also reduce the acceptance of modified audit opinion. For RMC's members sitting on more than one board committee, the probability of the company receiving modified audit opinion is higher. Further, companies experiencing modified audit opinion and losses during prior accounting years as well as higher leverage are positively associated with the acceptance of modified audit opinion. Lastly, companies with more than one business segment reduce the acceptance of modified audit opinion. The findings provide empirical evidence on the development and importance of the existence and characteristics of a RMC for the quality of companies' financial reporting. The existence of a separate RMC in non-banking and non-financial companies can reduce the acceptance of modified audit opinion due to risk reasons. Thus, regulators and policy makers need to note the importance of the existence of a separate RMC in nonbanking and non-financial companies as well as some characteristics of the committee that contribute to its success 2015 Thesis https://etd.uum.edu.my/4938/ https://etd.uum.edu.my/4938/1/s93574.pdf text eng public https://etd.uum.edu.my/4938/2/s93574_abstract.pdf text eng public Ph.D. doctoral Universiti Utara Malaysia Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. (2003). The association between audit committee characteristics and audit fees. Auditing: A Journal of Practice and Theory, 22(2), 17-32. Abdel-Khalik, A. R. (1993). Why do private companies demand auditing? a case for organizational loss of control. Journal of Accounting, Auditing and Finance, 8(1), 31-52. Abdullah, S. N. (2004). Board composition, CEO duality and performance among Malaysian listed companies. Corporate Governance, 4(4), 47-61. Abdul-Rasid, S. Z., Abdul-Rahman, A. R., & Wan-Ismail, W. K. 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