Impact of Section 201 of SOX on Auditor Independence

This study aims to investigate the impact of Section 201 of SOX on auditor independence through audit fees and audit opinions. This study also identifies the difference of audit opinions before and after SOX, which may signal an increase in auditor independence. Results show that after introduction of Section 201 of SOX, audit firms are charging higher audit fees than before and the auditors now can audit with more independence because they do not have to think of getting the contract of non-audit services. Before the introduction of Section 201 of SOX, the auditors used to issue unqualified audit opinion, as they were obligated to the client. After the introduction of Section 201 of SOX, the auditors are still issuing unqualified audit opinion but at the same time they are pointing out some additional observations based on financial statements, which clearly shows that the auditors are more independent now