Risk Management Committee, Auditor Choice and Audit Fees
We find that risk management committees and BIG4 audit firms contribute to audit fees. We use observations of 895 companies registered in Indonesia for 2014–2018, and to answer our hypothesis we used ordinary least squares analysis. The results show that BIG4 weakens the relationship between RMC and...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2021-08-01
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| Series: | Risks |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-9091/9/9/156 |
| _version_ | 1797517257218195456 |
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| author | Iman Harymawan Aditya Aji Prabhawa Mohammad Nasih Fajar Kristanto Gautama Putra |
| author_facet | Iman Harymawan Aditya Aji Prabhawa Mohammad Nasih Fajar Kristanto Gautama Putra |
| author_sort | Iman Harymawan |
| collection | DOAJ |
| description | We find that risk management committees and BIG4 audit firms contribute to audit fees. We use observations of 895 companies registered in Indonesia for 2014–2018, and to answer our hypothesis we used ordinary least squares analysis. The results show that BIG4 weakens the relationship between RMC and audit fees. Our study proves that higher demand for audit coverage will occur if there is a risk management committee within the company. As a result, audit fees increase. RMC may demand high-quality external guarantees, but the presence of BIG4 as a moderating variable reduces the relationship between the two variables. We assume that this can happen because auditors can work more efficiently if the company has an RMC, auditor(s) could indirectly reduce the risk because it is partially results from the performance of the RMC. In addition, we also use the robustness test to handle the endogeneity problem with consistent results as OLS. These findings provide evidence for policy makers about the relationship between audit fees and risk management committees. |
| first_indexed | 2024-03-10T07:14:12Z |
| format | Article |
| id | doaj.art-33613331c3e04c7b8b68ae9802fe51c2 |
| institution | Directory Open Access Journal |
| issn | 2227-9091 |
| language | English |
| last_indexed | 2024-03-10T07:14:12Z |
| publishDate | 2021-08-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Risks |
| spelling | doaj.art-33613331c3e04c7b8b68ae9802fe51c22023-11-22T15:08:49ZengMDPI AGRisks2227-90912021-08-019915610.3390/risks9090156Risk Management Committee, Auditor Choice and Audit FeesIman Harymawan0Aditya Aji Prabhawa1Mohammad Nasih2Fajar Kristanto Gautama Putra3Department of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya 60115, Jawa Timur, IndonesiaDepartment of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya 60115, Jawa Timur, IndonesiaDepartment of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya 60115, Jawa Timur, IndonesiaDepartment of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya 60115, Jawa Timur, IndonesiaWe find that risk management committees and BIG4 audit firms contribute to audit fees. We use observations of 895 companies registered in Indonesia for 2014–2018, and to answer our hypothesis we used ordinary least squares analysis. The results show that BIG4 weakens the relationship between RMC and audit fees. Our study proves that higher demand for audit coverage will occur if there is a risk management committee within the company. As a result, audit fees increase. RMC may demand high-quality external guarantees, but the presence of BIG4 as a moderating variable reduces the relationship between the two variables. We assume that this can happen because auditors can work more efficiently if the company has an RMC, auditor(s) could indirectly reduce the risk because it is partially results from the performance of the RMC. In addition, we also use the robustness test to handle the endogeneity problem with consistent results as OLS. These findings provide evidence for policy makers about the relationship between audit fees and risk management committees.https://www.mdpi.com/2227-9091/9/9/156risk management committeeBig 4audit fee |
| spellingShingle | Iman Harymawan Aditya Aji Prabhawa Mohammad Nasih Fajar Kristanto Gautama Putra Risk Management Committee, Auditor Choice and Audit Fees Risks risk management committee Big 4 audit fee |
| title | Risk Management Committee, Auditor Choice and Audit Fees |
| title_full | Risk Management Committee, Auditor Choice and Audit Fees |
| title_fullStr | Risk Management Committee, Auditor Choice and Audit Fees |
| title_full_unstemmed | Risk Management Committee, Auditor Choice and Audit Fees |
| title_short | Risk Management Committee, Auditor Choice and Audit Fees |
| title_sort | risk management committee auditor choice and audit fees |
| topic | risk management committee Big 4 audit fee |
| url | https://www.mdpi.com/2227-9091/9/9/156 |
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