The impact of corporate governance and the provision of non-audit services on auditor change decision

Auditing plays a crucial role in corporate governance process and it has been shown to increase the reliability and quality of an organization’s financial performance. Hence, understanding the reasons why companies change their auditor is very important. In Malaysia, not much study has been conducted on auditor change. Thus, the study seeks to examine the impact of corporate governance and the provision of non-audit service on auditor change decision. The study used companies listed on Bursa Malaysia, as at 31st December, 2009 to 2011. Furthermore, the research used
a sample size of 712 non-financial auditor change companies to test logistic regression Model of auditor change determinants. The results revealed that board independence, non-audit service, changes in management, size and big 4 are significant determinants of auditor change. The outcome of the study could improve corporate governance practices by management, and also increase the demand for
audit quality in an organization. The study therefore, recommended that future studies should include additional corporate governance variables like audit committee, management ownership and ownership concentration. Lastly, a longer period of years could be covered so as to have a true reflection of the issue