We find that quasi-indexer ownership is negatively associated with the ratio of non-audit service fees to total fees paid to the audit firm performing the audit service and with the likelihood of paying the audit firm more non-audit service fees than audit service fees. Using the annual Russell...

Independence (in fact as well as in appearance) is widely thought to be necessary for the quality of audits, and audit quality is often equated with independence. Private incentives to demand (and supply) independent certification of financial statements are thought to be insufficient, thus the...

Much has been written about Section 404 of the Sarbanes Oxley Act, especially the great expense that it inflicts upon SEC registrants preparing their annual reports. Less remarked on, though, is whether the restrictions that SOX imposes on the auditing profession in its relationship to its...

This paper shows that politically connected non-Big 4/5 auditors are associated with lower levels of audit quality (proxied by the level of abnormal non-core earnings and the proportion of modified audit opinions) than firms with no political connections. We also show that more economically...

The aim of this paper is to examine the impact of auditor reputation (i.e. size of audit firm) on auditor independence. Questionnaire and interview survey were employed to seek the perceptions of senior managers of Malaysian audit firms, banks and public listed companies. Consistent with prior...

In this paper we provide evidence on specific factors that could affect audit quality under mandatory rotation, using data from Korea where mandatory auditor rotation was put into effect in 2006. We find no evidence supporting the “Brillo pad effect” (the argument that departing auditors...

Two key assumptions underlying the regulation of U.S. financial reporting are the need to mandate the certification of financial statements, and to require that this certification be performed by independent auditors. Private incentives to demand (and supply) certification are thought to be...

In this paper we investigate whether auditors' decisions can be explained by accruals quality. Using alternative measures of accruals quality developed by prior researchers, we find that a firm with poorer accruals quality is associated with higher audit fees, a greater likelihood of receiving a...

Whether Big N auditors provide higher quality audits than non-Big N auditors remains a debate. Big N acquisitions of non-Big N auditors provide a unique setting of exogenous shocks to the acquired non-Big N auditors' client firms because they have to change auditors. We identify a sample of 331...

We posit that the effect of non-audit fees on audit quality is conditional on auditor industry specialization. Industry specialist auditors are more likely than non-specialists to be concerned about reputation losses and litigation exposure, and to benefit from knowledge spillovers from the...