Audit and non-audit fees and capital market perceptions of auditor independence

Ghosh, A A and Kallapur, S and Moon, D (2009) Audit and non-audit fees and capital market perceptions of auditor independence. Journal of Accounting and Public Policy, 28 (5). pp. 369-385. ISSN 1873-2070

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This study provides evidence on whether auditor independence-in-appearance, proxied by earnings response coefficients, is related to the non-audit fee ratio (non-audit to total fees from a client) or client importance (total fees from a client as a percentage of the total revenues of the audit firm). The results from large samples over the period 2001-2006 show, contrary to popular belief and the findings of some prior studies, that there is no evidence of a relation between perceived auditor independence and the non-audit fee ratio. However, perceived auditor independence is negatively associated with client importance, consistent with the economic theory of auditing. Our paper adds to the literature by examining the relative importance of non-audit fee ratios and client importance as determinants of independence-in-appearance. © 2009 Elsevier Inc. All rights reserved.

Item Type: Article
Subjects: Business and Management
Date Deposited: 03 Nov 2014 19:44
Last Modified: 16 Jul 2023 06:03

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