Audit Commitiee Compliance With KLSE List1ng Requirements And Firm Performance
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Date
2003-04
Authors
GAIK PHENG, EOW
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Abstract
This research investigated the extent of audit committee compliance with
respect to the Kuala Lumpur Stock Exchange (KLSE) listing requirements. The
ultimate objective of this study is to examine the association between the audit
committee's compliance with KLSE listing rules and the firm's performance.
Additionally, the research is intended to identify any significant difference between
non-PN4 companies and PN4 companies, especially in the area of compliance to
KLSE's audit committee requirements. PN4 companies are companies that fall under
Practice Notes 4 of KLSE's revamped listing requirements. These companies are
required to regularize ~eir financial condition in a timely manner. One hundred and
twenty companies were selected from eight hundred and fifty two public listed
companies on the KLSE. Year 2002 Annual reports are the data source for this study.
The five core KLSE disclosures compliances are audit committee composition,
written terms of reference, audit committee meetings and attendance, audit committee
activities and internal audit activities are examined. The results of thi~. study indicated
that the overall audit committee compliance level with KLSE listing requirement is at
92% which is considered satisfactory. By using Tobin's Q, return on assets (ROA)
and as proxies for finn performance, all these measures concluded that there is a
significant relationship between audit committee compliance to KLSE listing rules
with firm performance. However, there is no significant difference between PN4
companies and nori-PN4 companies with regard to audit committee compliance leveL
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Keywords
Audit Commitiee Compliance With KLSE , List1ng Requirements And Firm Performance