Auditor Fees and Auditor Independence: Evidence from Going Concern Reporting Decisions

53 Pages Posted: 13 Oct 2011

See all articles by Marshall A. Geiger

Marshall A. Geiger

University of Richmond

Allen D. Blay

Florida State University

Date Written: October 12, 2011


In this study we examine the association between audit service fees and non-audit service (NAS) fees and the auditor’s final decision regarding the type of opinion to render to a financially distressed client. Along with examining current fee levels and reporting decisions we also test the DeAngelo (1981) auditor independence model by examining the association between future fee receipts and current reporting decisions. Using data from the post-SOX reporting period of 2004-2006 and a stringent control sample, we find that the magnitude of NAS fees received in the current year is negatively related to the likelihood of the auditor modifying the audit opinion for going-concern uncertainty. We also find that current going-concern modification decisions are negatively related to total fees received by auditors in subsequent years. Our findings suggest that concerns over the relation between auditor fees and the possible impairment of auditor independence, as reflected in going-concern modification decisions, are supported in the more recent years for highly distressed clients.

Keywords: going-concern, auditor reporting, auditor independence, NAS fees

JEL Classification: M4

Suggested Citation

Geiger, Marshall A. and Blay, Allen Dennis, Auditor Fees and Auditor Independence: Evidence from Going Concern Reporting Decisions (October 12, 2011). Available at SSRN: or

Marshall A. Geiger

University of Richmond ( email )

28 Westhampton Way
Richmond, VA 23173
United States
804-287-1923 (Phone)

Allen Dennis Blay (Contact Author)

Florida State University ( email )

Rovetta Business Bldg. (RBA)
College of Business
Tallahassee, FL 32306-1110
United States
850-727-0953 (Phone)

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