Auditor independence and fee dependence

Craswell, A, Stokes, DJ and Laughton, J (2002) Auditor independence and fee dependence. Journal of Accounting & Economics, 33 2: 253-275. doi:10.1016/S0165-4101(02)00044-7

Author Craswell, A
Stokes, DJ
Laughton, J
Title Auditor independence and fee dependence
Journal name Journal of Accounting & Economics   Check publisher's open access policy
ISSN 0165-4101
Publication date 2002
Sub-type Article (original research)
DOI 10.1016/S0165-4101(02)00044-7
Volume 33
Issue 2
Start page 253
End page 275
Total pages 23
Editor R. Watts
J. Zimmerman
S. Kothari
Place of publication Amsterdam
Publisher Elsevier Science, BV
Collection year 2002
Language eng
Subject C1
350301 Finance
720299 Microeconomic issues not elsewhere classified
Abstract This study investigates whether fee dependence within the audit firms' offices jeopardises auditor independence. Fee dependence is examined at both the national audit firm level as well as the local office level and in a setting where public disclosure of fees is mandatory. We focus our tests on audit fee dependence and at the same time we control for the effects of non-audit service fee dependence post the 1989 mergers. We operationalise the exercise of independent judgement in auditing by the propensity to issue qualified audit opinions. If fee dependence affects auditors' independent judgement, then auditors are less likely to qualify the accounts. The study's results show that the level of auditor fee dependence does not affect auditor propensity to issue unqualified audit opinions. The findings remain robust to a number of sensitivity tests including the analyses controlling for the effects of non-audit service fee dependence and other settings in which there is heightened pressure on auditors to confront the effects of fee dependence on exercising independent audit judgement. (C) 2002 Elsevier Science B.V. All rights reserved.
Keyword Business, Finance
Audit Independence
Audit Reporting
Audit Fee
Non-audit Fee
Local And National Audit Market
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 81 times in Thomson Reuters Web of Science Article | Citations
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Created: Tue, 14 Aug 2007, 17:05:24 EST