CEO duality, audit committee effectiveness and audit risks: A study of the Malaysian market

Mark Anthony Gerard Bliss, Balachandran Muniandy, Abdul Majid

Research output: Journal article publicationJournal articleAcademic researchpeer-review

44 Citations (Scopus)


Purpose - The purpose of this study is to examine the relationship between a firm's internal corporate governance characteristics and audit fees, and whether the external auditor perceives higher inherent risk when CEO duality is present. Additionally, it aims to examine whether having more independent directors on audit committee moderates the auditor's perceived inherent risk when CEO duality is present. Design/methodology/approach - The data used in testing the hypotheses consist of all the Malaysian public listed companies on the main board in terms of market capitalization non-finance listed companies for year 2001. Multiple regression analysis is used to estimate the relationships proposed in the hypotheses. Findings - The results show that the presence of CEO duality on the board, a proxy for board independence, is associated with higher audit fees and that this positive relationship is significantly weakened when the firm has a higher proportion of independent directors on the audit committee. These results suggest that auditors in their assessment of the inherent risk of a firm recognize that independent audit committees provide an important check to moderate CEO dominance in firms where CEO duality is present. Originality/value - In this study, the effect of CEO duality and the independence of the board and audit committee are considered. The paper provides an important insight that having more independent directors on the audit committee moderates the auditor's perceived inherent risk when CEO duality is present following the new code of corporate governance introduced in Malaysia in the aftermath of the Asian financial crisis.
Original languageEnglish
Pages (from-to)716-728
Number of pages13
JournalManagerial Auditing Journal
Issue number7
Publication statusPublished - 1 Jan 2007
Externally publishedYes


  • Auditing
  • Corporate governance
  • Malaysia
  • Management effectiveness

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics, Econometrics and Finance(all)
  • Organizational Behavior and Human Resource Management

Cite this