Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/22908
Title: Auditor independence : evidence on the joint effects of auditor tenure and nonaudit fees
Authors: Gul, FA
Jaggi, BL
Krishnan, GV
Keywords: Auditor independence
Auditor tenure
Discretionary accruals
Nonaudit fees
Issue Date: 2007
Publisher: American Accounting Association
Source: Auditing, 2007, v. 26, no. 2, p. 117-142 How to cite?
Journal: Auditing 
Abstract: This study examines whether the impact of nonaudit fees on auditor independence is contingent on auditor tenure. The results, based on a sample of 4,720 U.S. firms for the years 2000 and 2001, show that there is a positive association between nonaudit fees and positive discretionary current accruals, a proxy for auditor independence, for firms with short auditor tenure of not more than three years. These findings suggest that nonaudit fees may impair auditor independence when auditor tenure is short and not when auditor tenure is long. Furthermore, exploratory analyses show that the positive association between nonaudit fees and earnings management for firms with short auditor tenure Is significant for small clients but not for large clients. Taken together, these results suggest that the association between nonaudit fees and auditor independence is contingent upon auditor tenure, and that high nonaudit fees have a negative impact on auditor independence when audit tenure is short and client firm size Is small.
URI: http://hdl.handle.net/10397/22908
ISSN: 0278-0380
DOI: 10.2308/aud.2007.26.2.117
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