Are independent commissioners able to mitigate higher audit fees in politically connected firms? Evidence from Indonesia

Iman Harymawan, Fajar Kristanto Gautama Putra, Wulandari Fitri Ekasari, Diaranny Sucahyati

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)

Abstract

This study aims to examine the relationship of political connection and independent commissioners to audit fees charged by the auditor. Using both univariate and multivariate analysis on 961 firm-year observations from Indonesian listed, we find that political connection (independent commissioners) has positive (negative) relationship to audit fees. We also find that independent commissioners are dominating the political connection in context of relationship to audit fees. Furthermore, we document that political connection relationship to audit fees is mainly derived from a board of directors, CEO, and affiliation from certain organisations, that are also weakened by the presence of an independent commissioner. Our study contributes to political connection literature in developing countries, specifically in audit fees. We also provide practical implication for management to consider the independent commissioner as one to minimise the demerits of political connection.

Original languageEnglish
Pages (from-to)24-43
Number of pages20
JournalInternational Journal of Innovation, Creativity and Change
Volume11
Issue number8
Publication statusPublished - 2020

Keywords

  • Audit fees
  • Independent commissioner
  • Political connection

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