Statements and capital markets journal of research in

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Statements and Capital Markets
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Journal of Research in Business, Economics and Management (JRBEM) ISSN: 2395-2210 Volume 5, Issue 2 available at 573 (Source : Seunghan, N. and Joshua, R., 2011). Methodology This study surveyed a total of 100 companies listed in Bursa Malaysia in 2010 under Industrial Product Sector. Selecting companies from same industry was to control for other factors which may contribute to variations. Findings presented herewith are based on selected secondary data of the listed companies and several short interviews with auditors. 3. Data Analysis Bell et al., (2001) found NAS fees significantly, and negatively influenced audit fees in the U.S. Similarly, using Australian data (Butterworth and Houghton, 1995), and UK data (Craswell and Francis, 1999) find NAS directly influence audit fees too. Hence, a significant negative relationship between audit fees and NAS is expected in this study. This is consistent Malaysia studies done by Halil et al., (2012) and Che Ahmad et al.,(2006) which found that if shareholders believe that NAS reduce the reliability of financial statements, then the statutory audit fees should be lesser. It was also argued by prior researcher, negative relationship between audit fees and NAS occur due to tradeoff between audit fees and NAS (Simunic, 1984). In short, the skills, experience and knowledge which was used to doing consultancy services will be reuse during statutory audit in which may reduce cost of resources used and time saving, thus reducing the audit fees. 3.1 Empirical data About 43% of selected sample did not record NAS fees in any page of annual reports. Terms used to define NAS fee in the annual reports were "Non-audit services fees", "Other audit fees "or "Non Statutory Audit". In order to increase effectiveness and efficient of an operation, and to regain appropriate management strategy to boost back competitive advantage of a company, shareholder may demand the board to take up NAS. An expert opinion is believed to bring back a company into profitability footing (Houghton and Ikin, 2001). This can be seen in Table 1, which shows that NAS increases with the level of revenue. However, an analysis as to whether NAS influences audit fee does not yield significant different. Table 1: Relationship between NAS and Audit Fees Years 2010 2010 2010 2010 Total Revenue ($ in Millions) N Avg Revenue in Millions Avg Audit Fee in Thousands Avg Non Audit- Fee in Thousands Total Avg Fees in Thousands 10,000,000,000 1 5,057,773,000 832,000 208,000 1,040,000 5,000,000,000 5,000,000,000 11 1,388,584,207 793,300 236,450 1,029,750 1,000,000,000 1,000,000,000 8 691,711,084 262,338 30,075 292,413 500,000,000 500,000,000 35 250,275,628 144,996 28,985 173,981 100,000,000 100,000,000 39 53,693,908 88,545 20,583 109,128 10,000,000 10,000,000 6 6,589,519 89,467 36,500 125,967 1,000,000 (Notes: N=100; Source : Data extracted from Annual Report 2010, Bursa Malaysia website)
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Journal of Research in Business, Economics and Management (JRBEM) ISSN: 2395-2210 Volume 5, Issue 2 available at 574 The data is further regressed to observed relationship, as revealed in Table 2., NAS is found to not influenced audit fees paid in the surveyed companies. Similar to this study, Butterworth and Houghton (1995) found no relationship between audit fees and NAS too. Likewise, in Malaysian studies, Md Yusof & Che Ahmad (2000) argue that no
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