Independent audit committee, risk management committee, and audit fees

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 anal...

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Autores principales:	Dyah Ayu Larasati, Melinda Cahyaning Ratri, Mohammad Nasih, Iman Harymawan
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2019
Materias:	risk management committee board risk committee independent audit committee audit fees Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/4e8a5231a21f4f2abb76df91eb33ce06
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spelling	oai:doaj.org-article:4e8a5231a21f4f2abb76df91eb33ce062021-12-02T16:09:31ZIndependent audit committee, risk management committee, and audit fees2331-197510.1080/23311975.2019.1707042https://doaj.org/article/4e8a5231a21f4f2abb76df91eb33ce062019-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2019.1707042https://doaj.org/toc/2331-1975This 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.Dyah Ayu LarasatiMelinda Cahyaning RatriMohammad NasihIman HarymawanTaylor & Francis Grouparticlerisk management committeeboard risk committeeindependent audit committeeaudit feesBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 6, Iss 1 (2019)
institution	DOAJ
collection	DOAJ
language	EN
topic	risk management committee board risk committee independent audit committee audit fees Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	risk management committee board risk committee independent audit committee audit fees Business HF5001-6182 Management. Industrial management HD28-70 Dyah Ayu Larasati Melinda Cahyaning Ratri Mohammad Nasih Iman Harymawan Independent audit committee, risk management committee, and audit fees
description	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.
format	article
author	Dyah Ayu Larasati Melinda Cahyaning Ratri Mohammad Nasih Iman Harymawan
author_facet	Dyah Ayu Larasati Melinda Cahyaning Ratri Mohammad Nasih Iman Harymawan
author_sort	Dyah Ayu Larasati
title	Independent audit committee, risk management committee, and audit fees
title_short	Independent audit committee, risk management committee, and audit fees
title_full	Independent audit committee, risk management committee, and audit fees
title_fullStr	Independent audit committee, risk management committee, and audit fees
title_full_unstemmed	Independent audit committee, risk management committee, and audit fees
title_sort	independent audit committee, risk management committee, and audit fees
publisher	Taylor & Francis Group
publishDate	2019
url	https://doaj.org/article/4e8a5231a21f4f2abb76df91eb33ce06
work_keys_str_mv	AT dyahayularasati independentauditcommitteeriskmanagementcommitteeandauditfees AT melindacahyaningratri independentauditcommitteeriskmanagementcommitteeandauditfees AT mohammadnasih independentauditcommitteeriskmanagementcommitteeandauditfees AT imanharymawan independentauditcommitteeriskmanagementcommitteeandauditfees
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Independent audit committee, risk management committee, and audit fees

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