Provision of Non-Audit Services and Individuals' Investment Decisions: Experimental Evidence

Posted: 12 Nov 2007

See all articles by Lucy F. Ackert

Lucy F. Ackert

Kennesaw State University - Michael J. Coles College of Business

Bryan K. Church

Georgia Institute of Technology - Accounting Area

Arnold Schneider

Georgia Institute of Technology - Accounting Area

Abstract

We conduct an experiment to investigate whether concerns about an auditor's independence and reputation affect individuals' investment decisions. We examine whether the disclosure of audit and non-audit fees affects participants' investment decisions. We find that investment in clients of a less reputable auditor is reduced relative to that in other companies when non-audit fees exceed audit fees. Participants' investment in companies audited by a reputable auditor, however, is not affected by fee disclosures.

Keywords: Non-Audit Services, Investment Decisions, Auditor Independence, Auditor Reputation

JEL Classification: M49, G11, C91

Suggested Citation

Ackert, Lucy F. and Church, Bryan K. and Schneider, Arnold, Provision of Non-Audit Services and Individuals' Investment Decisions: Experimental Evidence. Research in Accounting Regulations, Vol. 20, 2007, Available at SSRN: https://ssrn.com/abstract=1029177

Lucy F. Ackert (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Department of Economics and Finance
Kennesaw, GA 30144
United States
770-423-6111 (Phone)
770-499-3209 (Fax)

Bryan K. Church

Georgia Institute of Technology - Accounting Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-3907 (Phone)
404-894-6030 (Fax)

Arnold Schneider

Georgia Institute of Technology - Accounting Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
(404) 894-4907 (Phone)
(404) 894-6030 (Fax)

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