IDEAS home Printed from https://ideas.repec.org/a/taf/oabmxx/v6y2019i1p1707042.html
   My bibliography  Save this article

Independent audit committee, risk management committee, and audit fees

Author

Listed:
  • Dyah Ayu Larasati
  • Melinda Cahyaning Ratri
  • Mohammad Nasih
  • Iman Harymawan

Abstract

This study aims to analyze the role of an independent audit committee on the relationship between the Risk Management Committee (RMC) and audit fees. We use 510 observations from 216 different companies indexed on the Indonesia Stock Exchange for 2014–2016. This study uses ordinary least square analysis to prove our hypotheses. We find that participation of the independent commissioner as an audit committee member will strengthen the relationship between RMC and audit fee. Consistent with the demand side of audit theory, our study shows that the existence of a stand-alone risk management committee and a more independent commissioner sitting on the audit committee will demand higher audit coverage. As a result, it will increase the audit fee. It occurs since the existence of a more independent audit committees could be able to objectively assess the risk as recommended by the RMC and respond to it by increasing the demand on audit coverage for higher audit quality, and hence increase the fees paid to the external auditor. These findings could contribute to the regulatory bodies in Indonesia in terms of providing empirical evidence on the relationship between board governance structure and audit pricing within non-financial industries companies.

Suggested Citation

  • Dyah Ayu Larasati & Melinda Cahyaning Ratri & Mohammad Nasih & Iman Harymawan, 2019. "Independent audit committee, risk management committee, and audit fees," Cogent Business & Management, Taylor & Francis Journals, vol. 6(1), pages 1707042-170, January.
    • Handle: RePEc:taf:oabmxx:v:6:y:2019:i:1:p:1707042
    DOI: 10.1080/23311975.2019.1707042
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23311975.2019.1707042
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23311975.2019.1707042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Edosa Joshua Aronmwan & Sebastine Abhus Ogbaisi, 2022. "The nexus between standalone risk committees and tax aggressiveness: evidence from Nigeria," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    2. Eka Sari Ayuningtyas & Iman Harymawan, 2022. "Risk Management Committee and Textual Risk Disclosure," Risks, MDPI, vol. 10(2), pages 1-15, February.
    3. Iman Harymawan & Aditya Aji Prabhawa & Mohammad Nasih & Fajar Kristanto Gautama Putra, 2021. "Risk Management Committee, Auditor Choice and Audit Fees," Risks, MDPI, vol. 9(9), pages 1-16, August.
    4. Aditya Aji Prabhawa & Iman Harymawan, 2022. "Readability of Financial Footnotes, Audit Fees, and Risk Management Committee," Risks, MDPI, vol. 10(9), pages 1-21, August.

    More about this item

    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:taf:oabmxx:v:6:y:2019:i:1:p:1707042. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://cogentoa.tandfonline.com/OABM20 .

    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.