The associations of board of directors’ characteristics with modified audit opinion

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Waddah Kamal Hassan Omer
Khaled Salmen Aljaaidi
Mohd ‘Atef Md Yusof
Mohamad Hisyam Selamat


Modified audit opinion, financial reporting quality, board of directors’ characteristics, Malaysia


This study aims to find a relationship between board of directors’ characteristics and the likelihood that
a company receives a modified audit opinion (as a measure of the external reporting of companies) in
Malaysia. To test our hypotheses, we use the pooled cross-sectional logistic regression analysis for 136
firm-year observations listed on Bursa Malaysia over the period 2009-2011.The evidence we uncover is
consistent with the hypotheses that companies with large board size and greater financial expertise of
the board of directors are less likely to receive a modified audit opinion. The results obtained in this study
are consistent with the listing rules of the Malaysian-Corporate-Governance Code and the requirements
of the Bursa Malaysia Corporate-Governance-Guide, which consider and the requirements of the Bursa
Malaysia Corporate-Governance-Guide, which consider the significance of the board of directors as an
aspect of good corporate governance and its critical role in the Malaysian financial reporting process.


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