Political connections, political uncertainty and audit fees: Evidence from Pakistan

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dc.citation.issue2
dc.citation.volume37
dc.contributor.authorAhmad F
dc.contributor.authorBradbury M
dc.contributor.authorHabib A
dc.date.available2022-01-21
dc.date.issued2021-12-02
dc.description
dc.description.abstractPurpose: This paper aims to examine the association between political connections, political uncertainty and audit fees. The authors use various measures of political connections and uncertainty: political connections (civil and military), political events (elections) and a general measure of political stability (i.e. a world bank index). Design/methodology/approach: The authors measure the association between political connections, political uncertainty and audit fees. Audit fees reflect auditors’ perceptions of risk. The authors examine auditors’ business risk, clients’ audit and business risk after controlling for the variables used in prior audit fee research. Findings: Results indicate that civil-connected firms pay significantly higher audit fees than non-connected firms owing to the instability of civil-political connections. Military-connected firms pay significantly lower audit fees than non-connected firms owing to the stable form of government. Furthermore, considering high leverage as a measure of clients’ high audit risk and high return-on-assets (ROA) as a measure of clients’ lower business risk, the authors interact leverage and ROA with civil and military connections. The results reveal that these risks moderate the relationship between political connection and audit fees. Election risk is independent of risk associated with political connections. General political stability reinforces the theme that a stable government results in lower risks. Originality/value: The authors combine cross-sectional measures of political uncertainty (civil or military connections) with time-dependent measures (general measures of political instability and elections).
dc.description.publication-statusPublished
dc.format.extent255 - 282
dc.identifierhttp://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000736473800001&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=c5bb3b2499afac691c2e3c1a83ef6fef
dc.identifier.citationMANAGERIAL AUDITING JOURNAL, 2022, 37 (2), pp. 255 - 282
dc.identifier.doi10.1108/MAJ-06-2020-2715
dc.identifier.eissn1758-7735
dc.identifier.elements-id449905
dc.identifier.harvestedMassey_Dark
dc.identifier.issn0268-6902
dc.publisherEmerald
dc.relation.isPartOfMANAGERIAL AUDITING JOURNAL
dc.rights(c) The authors
dc.rights(CC BY-NC 4.0)
dc.subjectPolitical uncertainty
dc.subjectPolitical connections
dc.subjectAudit risk
dc.subjectAudit fees
dc.subject.anzsrc1501 Accounting, Auditing and Accountability
dc.titlePolitical connections, political uncertainty and audit fees: Evidence from Pakistan
dc.typeJournal article
pubs.notesNot known
pubs.organisational-group/Massey University
pubs.organisational-group/Massey University/Massey Business School
pubs.organisational-group/Massey University/Massey Business School/School of Accountancy
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