Abstract

http://ssrn.com/abstract=1886489
 
 

Citations (2)



 


 



Non-Audit Services and Financial Reporting Quality: Evidence from 1978-1980


Kevin Koh


Nanyang Technological University (NTU) - Nanyang Business School

Shivaram Rajgopal


Emory University - Goizueta Business School

Suraj Srinivasan


Harvard Business School

July 15, 2011

Harvard Business School Research Paper No. 1886489

Abstract:     
We provide evidence on the long standing concern on auditor conflicts of interest from providing non-audit services (NAS) to audit clients by using rarely explored NAS fee data from 1978-80 Using this earlier setting, we find cross-sectional evidence of improved earnings quality when auditors provide NAS, especially those related to information services. This is consistent with better audit quality from knowledge spillovers due to the joint offering of audit and consulting services. Events related to the repeal of these NAS disclosures in 1982 are associated with a small positive stock price reaction suggesting no adverse economic consequences of withdrawing NAS disclosures. Further, following the repeal of disclosure requirements we find no change in the earnings quality of client firms. In sum, data drawn from an earlier time period suggest that auditors’ reputational incentives, possible synergies and knowledge transfers imply that NAS offered by audit firms can be associated with improved audit and reporting quality in client firms.

Number of Pages in PDF File: 47

Keywords: auditor independence, audit fees, Nonaudit services, Auditing, conflict of interests, financial reporting, earnings management

JEL Classification: K22, G18, G28, G34, M40, M41, M49

working papers series





Download This Paper

Date posted: July 15, 2011 ; Last revised: August 8, 2011

Suggested Citation

Koh, Kevin and Rajgopal, Shivaram and Srinivasan, Suraj, Non-Audit Services and Financial Reporting Quality: Evidence from 1978-1980 (July 15, 2011). Harvard Business School Research Paper No. 1886489. Available at SSRN: http://ssrn.com/abstract=1886489 or http://dx.doi.org/10.2139/ssrn.1886489

Contact Information

Kevin Koh
Nanyang Technological University (NTU) - Nanyang Business School ( email )
S3-B2C-96, Nanyang Avenue
Nanyang Business School , NTU
Singapore, 639798
Singapore
(+65) 6790 4096 (Phone)
Shivaram Rajgopal
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
Suraj Srinivasan (Contact Author)
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700
Feedback to SSRN


Paper statistics
Abstract Views: 3,322
Downloads: 1,009
Download Rank: 7,955
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.282 seconds