Long term trends in non‐audit fees and audit quality: New evidence based on going concern opinions and financial restatements
Year: 2024
Type: article
Abstract: We revisit the question of whether high levels of non‐audit fees degrade audit quality. We use a structural model to specify the key variables and a grouping approach to reduce measurement error and tighten identification of the non‐audit fee threat to audit quality. We use going concern opinions (GCOs) and financial restatements to proxy for audit quality. We find that higher non‐audit fees reduce the percentage of GCOs issued around the passage of the Sarbanes–Oxley Act of 2002 (SOX), and that restatements are higher around SOX also. The trends in the GCO and restatement percentages after SOX are consistent with an improvement in audit quality.
Source: Accounting and Finance
DOI: 10.1111/acfi.13376
Institutions: University of Otago, University of California, Davis
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4404667701