Voluntary Demand for External Auditing, Internal Auditing, and Audit Committees by Family Business

Anis Widjajanto (Faculty of Economics, Sebelas Maret University)

Jurnal Akuntansi dan Bisnis
Vol 6, No 2 (2006)

Some research has investigated voluntary demand for auditing (external auditing and internal auditing) by family businesses. The result of the impact of the proportion of nonfamily management in the firm, the proportion of nonfamily representation on the board of director, firm size, and debt on the existence of the external auditing and internal auditing by family businesses is not consistent. This study investigates the impact of the proportion of nonfamily management in the firm, the proportion of nonfamily representation on the board of director, firm size, and debt on the existence of the external auditing, internal auditing and audit committee by family businesses. The respondents are head of accounting department or finance of family businesses. 140 questioners were sent to respondent (mail survey) and 24 were returned and analysed. Result from logistic regression analyses provides support for the hypothesized impact of the two agency proxies (the proportion of nonfamily management in the firm, the proportion of nonfamily representation on the board of director) on demand for external auditing, internal auditing and audit committee. Firm size doesn‟t influence the existence of external auditing, internal auditing and audit committee in family businesses and debt doesn‟t influence the existence of external auditing in family businesses.