Explicit and Implicit Auditor Lobbying for Clients - A Case of Advocacy Threat to Auditor Independence
Brian M. Burnett
Indiana University - Kelley School of Business
University of Colorado at Boulder
University of Colorado at Boulder - Department of Accounting
October 22, 2012
Public accounting firms in this country lobby legislators for their clients both explicitly and implicitly. Lobbying on behalf of their clients could pose an advocacy threat to auditor independence, which as a consequence may compromise audit quality. In this study, we examine whether a difference exists in audit quality when auditors lobby for their clients before the federal government. For implicit lobbying, we construct a novel proxy to measure the alignment of political strategies adopted by accounting firms and their clients. We find that when there is greater political alignment between auditors and clients, perceived audit quality is lower.
Keywords: lobbying, advocacy threat, auditor independence
JEL Classification: M4working papers series
Date posted: November 10, 2011 ; Last revised: January 24, 2013
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