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The Provision of Non-Audit Services, Audit Fees and Auditor Independence


  • Ayoib Che Ahmad

    (Faculty of Business, Auckland University of Technology, New Zealand)

  • Nava Subramaniam

    () (Department of Accounting, Finance and Economics, Griffith Business School Griffith University, Australia)


Although internal auditing (IA) services have been traditionally performed in-house, organizations are increasingly outsourcing such services. Using a Transaction Cost Economics (TCE) perspective, this study examined the influence of several organizational-level variables on the decision to outsource or in-house their internal audit function. The study also identified the type of IA services that were likely to be out-sourced rather than in-housed, the extent to which incumbent external financial statement auditors participated in outsourced arrangements and the level of interaction between the internal audit provider and audit committees. The results have implications for auditor independence, corporate governance and organizational performance.

Suggested Citation

  • Ayoib Che Ahmad & Nava Subramaniam, 2006. "The Provision of Non-Audit Services, Audit Fees and Auditor Independence," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 2(1), pages 21-40.
  • Handle: RePEc:usm:journl:aamjaf00201_21-40

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    References listed on IDEAS

    1. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    2. Chordia, Tarun & Roll, Richard & Subrahmanyam, Avanidhar, 2008. "Liquidity and market efficiency," Journal of Financial Economics, Elsevier, vol. 87(2), pages 249-268, February.
    3. Goldstein, Michael A. & A. Kavajecz, Kenneth, 2000. "Eighths, sixteenths, and market depth: changes in tick size and liquidity provision on the NYSE," Journal of Financial Economics, Elsevier, vol. 56(1), pages 125-149, April.
    4. David C. Porter & Daniel G. Weaver, 1997. "Tick Size and Market Quality," Financial Management, Financial Management Association, vol. 26(4), Winter.
    5. Comerton-Forde, Carole & Rydge, James, 2006. "The current state of Asia-Pacific stock exchanges: A critical review of market design," Pacific-Basin Finance Journal, Elsevier, vol. 14(1), pages 1-32, January.
    6. Pantisa Pavabutr & Sukanya Prangwattananon, 2009. "Tick size change on the Stock Exchange of Thailand," Review of Quantitative Finance and Accounting, Springer, vol. 32(4), pages 351-371, May.
    7. Ahn, Hee-Joon & Cai, Jun & Chan, Kalok & Hamao, Yasushi, 2007. "Tick size change and liquidity provision on the Tokyo Stock Exchange," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 173-194, June.
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    Cited by:

    1. Johl, Shireenjit & Subramaniam, Nava & Mat Zain, Mazlina, 2012. "Audit Committee and CEO Ethnicity and Audit fees: Some Malaysian evidence," The International Journal of Accounting, Elsevier, vol. 47(3), pages 302-332.
    2. Siti Subaryani Binti Zainol & M. Krishna Moorthy & Tengku Rahimah Binti Tengku Arifin, 2012. "Determinants of Non-Audit Services in Malaysia: A Theoretical 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(3), pages 97-111, July.


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