Auditor Independence Impairment: Bonding between Clients and Individual Engagement Partners

Spanish Journal of Finance and Accounting, Forthcoming

42 Pages Posted: 16 Jan 2011 Last revised: 3 Oct 2019

Date Written: September 09, 2019


In this study, I investigate whether the economic bond between an individual audit engagement partner and a client threatens auditor independence (and thus audit quality). As the propensity of the auditor to issue going-concern modified audit opinions (GCOs) is lower when there is auditor independence impairment, I examine to which extent fee dependency leads to a lower propensity to issue GCOs. Using archival data from Belgian private companies, I empirically examine a sample of 18,638 companies for the period 2008–2010 to test for the effect of the auditor-client bond on the audit opinion. None of my results support common concerns that client importance undermines auditors’ GCO reporting decisions, neither at the firm level nor at the partner level. Specifically, I find no evidence for a negative association between the likelihood that an auditor issues a GCO and the economic importance of that client to the auditor (firm or partner). These results are supported by analyses on an additional sample of 5,934 companies for the period 2011–2013. Despite broad concerns among academics and regulators about auditor independence and economic bonding, this is one of the first studies to investigate this issue at the partner level and for private clients.

Keywords: Client Importance, Audit Quality, Auditor Independence, Audit Opinion, Audit Partner

JEL Classification: M42, M41, G38

Suggested Citation

Hardies, Kris, Auditor Independence Impairment: Bonding between Clients and Individual Engagement Partners (September 09, 2019). Spanish Journal of Finance and Accounting, Forthcoming, Available at SSRN: or

Kris Hardies (Contact Author)

University of Antwerp ( email )

Department of Accounting and Finance
Pleinlaan 13
Antwerp, 2000

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