Title: THE EFFECT OF POLITICAL CONNECTIONS ON AUDIT COSTS: THE EFFECTIVENESS OF THE AUDIT COMMITTEE AND THE INDEPENDENT BOARD OF COMMISSIONERS AS MODERATING VARIABLES

Authors: FITRI NURJANAH

Affiliations: Masters Program in Accounting, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia

Publisher: Universitas Airlangga

Abstract

The purpose of this study is to prove the effect of political connections on audit fees with moderation in the effectiveness of the audit committee and the independent board of commissioners. The data analysis method used is descriptive statistics and hypothesis testing using multiple linear regression analysis and moderated regression analysis using the SPSS 20 application. The population in this study is all companies listed on the Indonesia Stock Exchange during 2015-2018. This study uses a sample of 584 companies. Audit fees are measured by the natural logarithm of audit fees, political connections are measured using politically exposed persons in Bank Indonesia regulations, effectiveness is measured using a composite index, while the independent board of commissioners is measured using the independent board of commissioners ratio. Based on the results of the analysis and discussion explained previously, the results of the study are (1) political connections have a significant positive effect on audit fees, (2) the effectiveness of the audit committee weakens the effect of political connections on audit fees, (3) the independent board of commissioners weakens the effect of political connections on audit fees.

Keywords: audit fees, independent board of commissioners, audit committee effectiveness, political connections

Sources: http://repository.unair.ac.id/92611/