IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v2y2012i1p162-175.html
   My bibliography  Save this article

Perceived Social Power and Audit Committee Effectiveness in Malaysia: The Conceptual Model

Author

Listed:
  • Annie Ng Cheng San

    (Universiti Tunku Abdul Rahman)

  • M. Krishna Moorthy

    (Universiti Tunku Abdul Rahman)

  • Choe Kum Lung

    (Universiti Tunku Abdul Rahman)

Abstract

Decision is best implemented using the social power. Social power exists in everywhere and needs for every organization actor. As an independent governance mechanism, Audit Committee (AC) needs social power to achieve the desired governance outcome. However, study of the social power which contributes to AC effectiveness is limited, especially in Malaysia. Majority of the past researches only focused on the formal characteristic as the contributor for AC effectiveness. A comprehensive view on AC studies is needed. With ongoing frauds, public confidence towards AC effectiveness has been impaired. Factors which will enhance AC effectiveness have become the major concern. Thus, this research attempts to propose a conceptual framework to investigate the influence of perceived social powers: independence, expert, legitimate, institutional support, diligence and sanctionary power towards AC effectiveness. This paper seeks to close the literature gap by investigating the AC effectiveness in different dimension and leads to deeper understanding of AC dynamic powers. It provides guidance to AC members on which social power is important and how these powers affect their effectiveness. It also sheds some light for the regulators to identify the AC social power which contributes to the effectiveness that cannot easily be codified in the governance code.

Suggested Citation

  • Annie Ng Cheng San & M. Krishna Moorthy & Choe Kum Lung, 2012. "Perceived Social Power and Audit Committee Effectiveness in Malaysia: The Conceptual Model," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(1), pages 162-175, January.
    • Handle: RePEc:hur:ijaraf:v:2:y:2012:i:1:p:162-175
    as

    Download full text from publisher

    File URL: http://www.hrmars.com/admin/pics/665.pdf
    Download Restriction: no
    File URL: http://www.hrmars.com/admin/pics/665.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stuart Turley & Mahbub Zaman, 2007. "Audit committee effectiveness: informal processes and behavioural effects," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(5), pages 765-788, September.
    2. Saam, Nicole J., 2007. "Asymmetry in information versus asymmetry in power: Implicit assumptions of agency theory?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(6), pages 825-840, December.
    3. Laura Spira, 1998. "An Evolutionary Perspective on Audit Committee Effectiveness," Corporate Governance: An International Review, Wiley Blackwell, vol. 6(1), pages 29-38, January.
    4. Johnathan Magrane & Sue Malthus, 2010. "Audit committee effectiveness: a public sector case study," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(5), pages 427-443, May.
    5. Jain, Ajay K & Giga, Sabir I & Cooper, Cary L, 2011. "Social power as a means of increasing personal and organizational effectiveness: The mediating role of organizational citizenship behavior," Journal of Management & Organization, Cambridge University Press, vol. 17(3), pages 412-432, May.
    6. Norman Mohd Saleh & Takiah Mohd Iskandar & Mohd Mohid Rahmat, 2007. "Audit committee characteristics and earnings management: evidence from Malaysia," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 15(2), pages 147-163, April.
    7. Yi Meng Chen & Robyn Moroney & Keith Houghton, 2005. "Audit committee composition and the use of an industry specialist audit firm," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(2), pages 217-239, July.
    8. Mark L. Defond & Rebecca N. Hann & Xuesong Hu, 2005. "Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?," Journal of Accounting Research, Wiley Blackwell, vol. 43(2), pages 153-193, May.
    9. Goodrich, Kendall & Mangleburg, Tamara F., 2010. "Adolescent perceptions of parent and peer influences on teen purchase: An application of social power theory," Journal of Business Research, Elsevier, vol. 63(12), pages 1328-1335, December.
    10. Arne Nygaard & Harald Biong, 2010. "Erratum to: The Influence of Retail Management’s Use of Social Power on Corporate Ethical Values, Employee Commitment, and Performance," Journal of Business Ethics, Springer, vol. 97(3), pages 339-339, December.
    11. Rupley, Kathleen & Almer, Elizabeth & Philbrick, Donna, 2011. "Audit committee effectiveness: Perceptions of public company audit committee members post-SOX," Research in Accounting Regulation, Elsevier, vol. 23(2), pages 138-144.
    12. Menon, Krishnagopal & Deahl Williams, Joanne, 1994. "The use of audit committees for monitoring," Journal of Accounting and Public Policy, Elsevier, vol. 13(2), pages 121-139.
    13. Mohd Mohid Rahmat & Takiah Mohd Iskandar & Norman Mohd Saleh, 2009. "Audit committee characteristics in financially distressed and non-distressed companies," Managerial Auditing Journal, Emerald Group Publishing, vol. 24(7), pages 624-638, July.
    14. Dezoort, F. T., 1998. "An analysis of experience effects on audit committee members' oversight judgments," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 1-21, January.
    15. Arne Nygaard & Harald Biong, 2010. "The Influence of Retail Management’s Use of Social Power on Corporate Ethical Values, Employee Commitment, and Performance," Journal of Business Ethics, Springer, vol. 97(1), pages 87-108, November.
    16. Laura F. Spira, 2003. "Audit Committees: begging the question?," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 180-188, July.
    17. Kar‐yiu Wong & Richard Y. K. Ho, 2002. "The Asian Crisis, 1997," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 1-1, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. C. Piot & L. Kermiche, 2009. "A quoi servent les comités d'audit ? Un regard sur la recherche empirique," Post-Print halshs-00537952, HAL.
    2. Shivan Sarpal, 2017. "Analyzing Performance Implications of Selected Audit Committee Characteristics: A Study of Indian Corporate Sector," Business Perspectives and Research, , vol. 5(2), pages 137-150, July.
    3. George Drogalas & Michail Nerantzidis & Dimitrios Mitskinis & Ioannis Tampakoudis, 2021. "The relationship between audit fees and audit committee characteristics: evidence from the Athens Stock Exchange," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(1), pages 24-41, March.
    4. Carlo Regoliosi & Alessandro d’Eri, 2014. "“Good” corporate governance and the quality of internal auditing departments in Italian listed firms. An exploratory investigation in Italian listed firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(3), pages 891-920, August.
    5. Bilal, & Chen, Songsheng & Komal, Bushra, 2018. "Audit committee financial expertise and earnings quality: A meta-analysis," Journal of Business Research, Elsevier, vol. 84(C), pages 253-270.
    6. Amad Rashid & Basariah Salim & Halimah Nasibah Ahmad, 2021. "Internal Audit Effectiveness and Audit Committee Characteristics:Empirical Evidence from Pakistan," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 3(1), pages 1-13, june.
    7. George Drogalas & Michail Nerantzidis & Margaritis Samaras & Michail Pazarskis, 2020. "Audit committee and factors that affect its characteristics: the case of Greece," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(4), pages 181-194, December.
    8. Wael Almaqoushi & Ronan Powell, 2021. "Audit committee quality indices, reporting quality and firm value," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 185-229, January.
    9. Ismail Adelopo & Kumba Jallow & Peter Scott, 2012. "Multiple large ownership structure, audit committee activity and audit fees," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(2), pages 100-121, September.
    10. Akeel M. Lary & Dennis W. Taylor, 2012. "Governance characteristics and role effectiveness of audit committees," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(4), pages 336-354, April.
    11. Comprix, Joseph & Guo, Jun & Zhang, Yan & Zhou, Nan, 2017. "Setting expected rates of return on pension plan assets: New evidence on the influence of audit committee accounting experts," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 159-166.
    12. Ghafran, Chaudhry & O'Sullivan, Noel, 2017. "The impact of audit committee expertise on audit quality: Evidence from UK audit fees," The British Accounting Review, Elsevier, vol. 49(6), pages 578-593.
    13. Md. Borhan Uddin Bhuiyan & Solomon Opare & Zahir Ahmed, 2024. "Does Audit Committee Busyness Affect Financial Restatement? Evidence from Audit Committee Share Ownership," Australian Accounting Review, CPA Australia, vol. 34(1), pages 29-54, March.
    14. Badolato, Patrick G. & Donelson, Dain C. & Ege, Matthew, 2014. "Audit committee financial expertise and earnings management: The role of status," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 208-230.
    15. Francesco Perrini & Angeloantonio Russo & Antonio Tencati & Clodia Vurro, 2011. "Deconstructing the Relationship Between Corporate Social and Financial Performance," Journal of Business Ethics, Springer, vol. 102(1), pages 59-76, March.
    16. Nidhi Bansal & Anil K. Sharma, 2016. "Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 103-116, March.
    17. Kang, Yoon Ju & Trotman, Andrew J. & Trotman, Ken T., 2015. "The effect of an Audit Judgment Rule on audit committee members’ professional skepticism: The case of accounting estimates," Accounting, Organizations and Society, Elsevier, vol. 46(C), pages 59-76.
    18. Nikunj Kumar Jain & Abinash Panda & Piyush Choudhary, 2020. "Institutional pressures and circular economy performance: The role of environmental management system and organizational flexibility in oil and gas sector," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3509-3525, December.
    19. Hwan-Yann Su, 2014. "Business Ethics and the Development of Intellectual Capital," Journal of Business Ethics, Springer, vol. 119(1), pages 87-98, January.
    20. Julia Yonghua Wu & Ronán Feehily & Beverley Rae Lord, 2022. "The Corporate Governance Role of Audit Committees: Through the Lenses of New Zealand Institutional Investors," Australian Accounting Review, CPA Australia, vol. 32(1), pages 63-76, March.

    More about this item

    Keywords

    Audit Committee; Audit Committee Effectiveness; social power; Malaysia;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:2:y:2012:i:1:p:162-175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.