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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
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    References listed on IDEAS

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    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

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