Nonaudit fees, auditor independence, and bond ratings

被引:45
作者
Brandon, Duane M. [1 ]
Crabtree, Aaron D.
Maher, John J.
机构
[1] Auburn Univ, Auburn, AL 36849 USA
[2] Univ Nebraska, Lincoln, NE 68583 USA
[3] Virginia Polytech Inst & State Univ, Blacksburg, VA 24061 USA
来源
AUDITING-A JOURNAL OF PRACTICE & THEORY | 2004年 / 23卷 / 02期
关键词
auditor fees; auditor independence; bond ratings;
D O I
10.2308/aud.2004.23.2.89
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
Recent accounting scandals and perceived audit failures have resulted in excessive criticism of the accounting and auditing professions. The financial press has expressed disdain at the presumably substandard work that was completed on audit clients, ostensibly at the expense of the public good. Our research investigates one aspect of this situation by exploring the effects that nonaudit services performed by a firm's external auditors have on perceived auditor independence in the bond market. Specifically, we analyze the effects that the magnitude and relative degree of nonaudit services have on the bond rating process. Regression results indicate that the amount of nonaudit services provided by a firm's external auditors is negatively associated with that client's bond rating. However, results of classification accuracy analyses fail to demonstrate any improvement in performance as a consequence of adding nonaudit fees to a benchmark prediction model, indicating no economic effect on the actual bond ratings. These results afford insights concerning bond rating analysts' perceptions of auditor independence and provide empirical evidence regarding the role that audit and nonaudit service fees play in establishing a firm's bond rating.
引用
收藏
页码:89 / 103
页数:15
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