The Sarbanes-Oxley Act and Auditor Independence: Preliminary Evidence from Audit Opinion and Discretionary Accruals
29 Pages Posted: 28 Aug 2003
Date Written: August 2003
Abstract
This paper examines whether the passing of the Sarbanes-Oxley Act is associated with enhanced auditor independence. Under the Act, most of the previous non-audit services provided by auditors are restricted. It is expected that by restricting the provision of such services by the incumbent auditors, auditor independence is enhanced. I report that financial statements with fiscal year end in August 2002 or thereafter are more likely to be associated with modified audit opinions and lower discretionary accruals. Hence, the Act is associated with enhanced auditor independence.
Keywords: Sarbanes-Oxley Act, auditor independence, modified opinion, discretionary accruals, non-audit services
JEL Classification: M49, M41, M43, G38
Suggested Citation: Suggested Citation
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