Affiliation:
1. Sharad C. Asthana and Jeff P. Boone are both Professors at The University of Texas at San Antonio.
Abstract
SUMMARY
This study tests the hypotheses that below-normal audit fees signal important nuances in the balance of bargaining power between the auditor and the client, and that such power may ultimately influence audit quality. We find that audit quality, proxied by absolute discretionary accruals and meeting or beating analysts' earnings forecasts, declines as negative abnormal audit fees increase in magnitude, with the effect amplified as proxies for client bargaining power increase. We find that this effect is dampened in years following the Sarbanes-Oxley Act (SOX), suggesting that SOX was effective in enhancing auditor independence.
Publisher
American Accounting Association
Subject
Economics and Econometrics,Finance,Accounting
Cited by
135 articles.
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