The Relation Between Auditors Fees For Non Audit Services And Earnings Quality Primary Source Edition
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| Author | : Frankel M |
| Publisher | : Nabu Press |
| Total Pages | : 102 |
| Release | : 2014-02 |
| Genre | : |
| ISBN | : 9781293562529 |
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This is a reproduction of a book published before 1923. This book may have occasional imperfections such as missing or blurred pages, poor pictures, errant marks, etc. that were either part of the original artifact, or were introduced by the scanning process. We believe this work is culturally important, and despite the imperfections, have elected to bring it back into print as part of our continuing commitment to the preservation of printed works worldwide. We appreciate your understanding of the imperfections in the preservation process, and hope you enjoy this valuable book.
| Author | : Richard M. Frankel |
| Publisher | : Forgotten Books |
| Total Pages | : 94 |
| Release | : 2018-03-03 |
| Genre | : Business & Economics |
| ISBN | : 9780666794659 |
Download The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality (Classic Reprint) Book in PDF, Epub and Kindle
Excerpt from The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality This paper provides empirical evidence on the relation between non-audit services and earnings quality. We test hypotheses concerning: (1) the association between a firm's purchase of non-audit services from its auditor and earnings management, and (2) the stock price reaction to the disclosure of non-audit fees. In the past decade there has been a dramatic increase in the proportion of fee revenue auditors derive from non-audit services, yet we know little about how non-audit services are related to earnings quality.1 Concern about the effect of non-audit services on the financial reporting process was a primary motivation for the Securities and Exchange Commission (sec) to issue revised auditor independence rules on November 15, 2000. The rules require firms to disclose the amount of all audit and non-audit fees paid to its auditor. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
| Author | : Frankel Richard M |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2023-07-18 |
| Genre | : Business & Economics |
| ISBN | : 9781021260963 |
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| Author | : Richard M. Frankel |
| Publisher | : |
| Total Pages | : 44 |
| Release | : 2002 |
| Genre | : Auditing |
| ISBN | : |
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We examine the association between the provision of non-audit services and earnings quality. Because of concerns regarding the effect of non-audit services on financial reporting credibility, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees paid to auditors for audit and non-audit services. Using data collected from proxy statements filed between February 5, 2001 and June 15, 2001, we present evidence that firms purchasing more non-audit services from their auditor are more likely to just meet or beat analysts' forecasts and to report larger absolute discretionary accruals. However, the purchase of non-audit services is not associated with meeting other earnings benchmarks. We also find that the unexpected component of the non-audit to total fee ratio is negatively associated with stock returns on the filing date. These results are consistent with arguments that the provision of non-audit services strengthens an auditor's economic bond with the client and that investors price this effect. Keywords: Auditor independence; Auditor fees; Earnings management; Discretionary accruals. JEL Classification: G12, M41, M43, M49, L84.
| Author | : Richard M. Frankel |
| Publisher | : |
| Total Pages | : 50 |
| Release | : 2003 |
| Genre | : |
| ISBN | : |
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This paper examines whether auditor fees are associated with earnings management and the market reaction to the disclosure of auditor fees. Using data collected from proxy statements, we present evidence that non-audit fees are positively associated with small positive earnings surprises, the magnitude of absolute discretionary accruals, and the magnitude of income-increasing and income-decreasing discretionary accruals. In contrast, audit fees are negatively associated with these earnings management indicators. These results are robust to a variety of alternative variable definitions and model specifications. Specifically, contrary to the claims of Ashbaugh et al. (2002), the results are robust to the use of performance-matched discretionary accruals. Moreover, contrary to the claims of Francis and Ke (2002), the results for small positive earnings surprises are robust regardless of whether the comparison group is all other earnings surprises or small negative earnings surprises. Our final set of results provide evidence of a significant negative association between non-audit fees and share values on the date the fees were disclosed, although the effect is small in economic terms.
| Author | : Jeffrey Coulton |
| Publisher | : |
| Total Pages | : 39 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Audit Fees, Non-Audit Services and Auditor-Client Economic Bonding Book in PDF, Epub and Kindle
We investigate whether auditor independence is compromised by either the mix of audit and non audit services (NAS), or simply unusually large NAS or audit fees. The results help reconcile apparently conflicting evidence in prior studies linking NAS and indicators of earnings management, as well as providing new insights on the relation between the incentive structures faced by auditors and variation in audit quality. Using the unexpected accrual component of earnings as a proxy for the effect of impaired auditor independence, we initially find that client firms purchasing an unexpectedly large NAS fee mix (i.e., relative to audit fees) display some evidence of aggressive accounting. However, when we explicitly allow for the possibly endogenous nature of unexpected accruals and unexpected NAS, this result no longer holds. In contrast, similar evidence of a positive relation between the magnitude of unexpectedly large audit fees and positive unexpected accruals still occurs (albeit more weakly) after explicitly allowing for possible endogeneity. A significant positive association between unexpected total fees (audit plus NAS) and the magnitude of positive unexpected accruals is even more robust. However, further tests shows that these quot;resultquot; are confined to clients of Non-Big 6 auditors. We therefore conclude that for large audit firms, the incentive to protect larger than expected fees is outweighed by the importance of their reputation for providing high quality audits relative to smaller audit firms. The results also highlight how sensitive conclusions about possible quot;NAS effectsquot; are to the choice of proxy for economic bond as well as the precise experimental design.
| Author | : Benito Arrunada |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 203 |
| Release | : 2013-11-11 |
| Genre | : Business & Economics |
| ISBN | : 1475767285 |
Download The Economics of Audit Quality Book in PDF, Epub and Kindle
This book focuses on market mechanisms which protect quality in the provision of audit services. The role of public regulation is thus situated in the context defmed by the presence of these safeguard mechanisms. The book aims to contribute to a better understanding of these market mechanisms, which helps in defining the con tent of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. An analysis at a more general level is provided in the three chapters making up Part 1. In the four chapters of Part 2, on the other hand, this analysis is applied to a particular problem to determine how those non-audit services often provided by auditors to their audit clients should be regulated. Finally, Chapter 8 contains a summary of the analysis and conclusions of the work. The conclusion with regard to non-audit services is that their provision generates beneficial effects in terms of costs, technical competence, professional judgment and competition and, moreover, need not prejudice auditor independence or the quality of these services. This as sessment leads, in the normative sphere, to recommending a legislative policy aimed at facilitating the development and use of safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self-regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility.
| Author | : Ariel J. Markelevich |
| Publisher | : |
| Total Pages | : 36 |
| Release | : 2010 |
| Genre | : |
| ISBN | : |
Download Auditor Fees, Abnormal Fees and Audit Quality Before and after the Sarbanes-Oxley Act Book in PDF, Epub and Kindle
Our study examines fees paid to auditors for audit and non-audit services during the period 2000 to 2003. We document a statistically significant positive association between audit fees and the absolute value of performance-adjusted discretionary accruals over all years. We also identify a significant positive association between non-audit fees and discretionary accruals in years 2000 and 2001, but no such association in later years (after passage of the Sarbanes-Oxley Act). This lack of association in 2002 and 2003 may be a result of legislation that limits the types of non-auditing services that auditors can provide to audit clients. To address the potential impact of fee composition and client importance on auditor independence, we extend our empirical analysis by incorporating predictions of abnormal audit and non-audit fees. We derive abnormal fees using a fee estimation model drawn from prior literature. We find evidence consistent with the view that clients with higher abnormal fees are more apt to exert influence on their auditors, which in turn may lead to a breach in auditor independence. Overall, our results are most consistent with economic bonding being the primary determinant of auditor behavior.
| Author | : Chee Yeow Lim |
| Publisher | : |
| Total Pages | : 59 |
| Release | : 2013 |
| Genre | : |
| ISBN | : |
Download Non-Audit Service Fees and Audit Quality Book in PDF, Epub and Kindle
Recent studies on whether the provision of non-audit services impairs audit quality document mixed results, depending on the proxy for auditor quality used. We posit that the effect of non-audit fees on audit quality is conditional on auditor industry specialization in that audit quality is less likely to be impaired in the case of industry specialist auditors providing non-audit services. Our premise is that industry specialist auditors are more likely to be concerned about reputation losses and litigation exposure, and to benefit from knowledge spillovers from the provision of non-audit services. We find some evidence that audit quality (as measured by increased propensity to issue going-concern opinion, increased propensity to miss analysts' forecasts, as well as higher earnings-response coefficients) is less likely to be reduced for firms that acquire non-audit services from industry specialist auditors compared to non-specialist auditors. Implications are discussed.
| Author | : Sylvia Chai |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2000 |
| Genre | : Auditing |
| ISBN | : |
Download Audit and Non-audit Service Provision Book in PDF, Epub and Kindle
This study investigates whether auditors compromise their independence when they provide audit and non-audit services jointly to their clients. The relationship between the level of non-audit services fees and two independence-related measures: (i) the level of earnings management and (ii) the type of audit opinion issued, is examined. The results indicate that for Big 6 audited companies purchasing higher levels of non-audit services engage in higher levels of earnings management compared to companies purchasing a lower level of non-audit services from their incumbent auditor. However, the study finds that high level purchasers of non-audit services are not more likely to receive a clean opinion compared to low level purchasers of non-audit services. In order to explain the conflicting results, further tests are conducted to determine whether companies that purchase concurrently a high level of non-audit services and indulge in high levels of earnings management are more likely to receive a clean audit opinion. This is important since auditors will only be perceived as compromising their independence if they fail to issue qualifications when the level of earnings management is high. The findings indicate that no relationship exists between the type of audit opinion issued and the interaction between the level of non-audit service fees and the level of earnings management. Hence, it is concluded that auditors do not impair their independence in terms of willingness to issue deserved qualifications when providing joint services.00000 g.
