Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/9721
Title: Non-audit services, auditor quality and the value relevance of earnings
Authors: Gul, FA
Tsui, J
Dhaliwal, DS
Keywords: Audit quality
Auditor independence
Earnings, non-audit services
Value relevance
Issue Date: 2006
Publisher: Wiley-Blackwell
Source: Accounting and finance, 2006, v. 46, no. 5, p. 797-817 How to cite?
Journal: Accounting and finance 
Abstract: This paper tests the hypothesis that there is an inverse relation between non-audit services (NAS) provided by a firm auditor and the value relevance of earnings (measured as the earnings response coefficient) and that this relation is weaker for firms with Big 6 auditors. The hypothesis is based on anecdotal evidence and previous research that suggests that the provision of NAS by the external auditor is likely to adversely affect investors' perceptions of the credibility of financial reports, and that Big 6 auditors, because of reputational capital and litigation costs, are likely to mitigate the adverse effects of NAS. Results using 840 firm-year observations of Australian companies document a statistically significant inverse relationship between NAS and the value relevance of earnings, and this inverse relationship is weaker for Big 6 auditors, therefore supporting the hypothesis.
URI: http://hdl.handle.net/10397/9721
ISSN: 0810-5391
EISSN: 1467-629X
DOI: 10.1111/j.1467-629x.2006.00189.x
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